The Investors Guide to Rate Hikes

Rising interest rates are bad — very, very bad. That’s the prevalent message being made loud and ominously clear to investors as markets brace for the inevitable end to the ultra-loose monetary policies south of the border and elsewhere around the world.

The warning, while important to heed, doesn’t quite add up. It’s true that many investors will take a hit from interest rate increases down the road — and, make no mistake, rates will rise — but the impact on the bonds, stocks, commodities and other asset classes that line their portfolios will be far more variable. Rising rates may even have a net positive effect on performance given the right economic backdrop.  Read More…

This article has 10 Comments

  1. Nicholas

    I thank the author for pointing out that rising interest rates can (and usually does) have a benefit on improved performances for things like stocks.

    Rising rates get a bad rap a lot of times.

  2. Leroy G.

    Keep drinking that kool-aid. Rates go up and they go down. The reasonings can vary but for the most part its easy to predict with the motions of the economy. If cosumers are shopping and buying homes you are golden with the direction of rates.

  3. Keifer

    I always get tired arguing with people that think Bonds are not good investments. I am now 60 years old and have had most of my portfolio in Bond holdings and if you are wise in what you invest in you can get pretty good fixed income indefinitely; completely weathered from these supposed rate hikes.

  4. Aydan C.

    Ah yes the wonderful world of inflations and interest rates.

    I havent read anything that i didn't already know but this is a good lesson for new investors to understand. Most people surprisingly don't really understand the connection between interest rates and economics.

  5. Valdez Bjorkman

    I still say invest into low MER Indexed ETFs and you will be fine in the long-term. Irrespective of interest rates.

  6. Jon

    So do i buy low and sell high or what? 😛

  7. Bradford

    Meh nothing new. It glosses over the details and doesnt get specific enough. For me i want to know how to avoid the hikes.

  8. Yamin Reel

    I just came here hoping to find a connection between rates and REITs. I got into real estate investments through family and its been a bit of a rollercoaster for me. Still not sure what to think.

    So far in 2013 rates haven't had too much affect but i'd love to hear if anyone had some issues.

  9. Etienne B

    Because the US still hasn't put the hammer to wallstreet with proper regulation like Glass-Stiegel we are in for another crash soon so concerning yourself over cyclic interest rates seems silly.

  10. Massimo

    I still get confused how interest rates relate to my personal savings account. I remember when Canada was offering interest rates above and beyond 4%. Now i see it has never been that high and i would be lucky to get 1% these days. What happened?

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