Low interest rates sound exciting and attractive. Consumers can take advantage of those by getting cheaper loans. But what if you are an investor? It could be a challenging time especially when you aim to keep your money growing. Bank deposits may get worse at this time because those already assume much lower interest rates before prevailing rates dropped. Here are some ideas that could serve as your guidance if you intend to take advantage of the current low rates.
- Invest in short-term bonds.
If you are interested in investing in bonds, obtain short-term options when interest rates are low. Prices of those may remain low. It may not be enticing to invest in this instrument in this condition as your returns will depend on the interest rates. But if you want a secured and liquid investment, it can be a good choice. You may constantly monitor rates if you anticipate interest rate hikes in the coming weeks or months.
- Look at mutual funds.
Interest rates may not be attractive. But mutual funds can still be ideal if you want your money to grow. The fund would be handled by qualified and reliable fund managers, who could find many other ways to make money grow despite the dismal interest rate movements. While you are at it, you should also consider investing in a more diversified portfolio.
- Consider overseas investments.
It is ideal to consider allocating a portion of your current portfolio into foreign assets. When interest rates in your local market decline, you may invest in available overseas debts while waiting for your home market to rise. Foreign bonds can be good options as those respond to rates quickly and those are based on credit worthiness of issuing countries. Again, it is wiser to diversify your investment portfolio.
- Invest in stocks.
The stock market can be an ideal place to put your investments at this time. Some stocks can be really attractive despite lower rates. As always, the bourse market facilitates more opportunities for making your money grow exponentially even in a short while. Just be sure you are more careful when choosing the particular stocks you would buy. Don’t hesitate to ask for guidance from the experts. You may rely on a credible broker to do transactions on your behalf.
- Buy a car or a house.
Of course, while the interest rates are low, it may be the best time to buy a car or a house especially if you are thinking about getting financing. Any available loan can take lower interest rates at this time. Many investors and buyers are always waiting for this opportunity because low interest rates easily translate to lower transaction costs. Just be sure you are picking the right finance product. Stick to those that are fixed and that would not quickly rise if prevailing rates do so. Seize the opportunity. Now could be the best time to finally buy your dream car or house using a bank loan.
Andrew is a personal finance enthusiast, who enjoys blogging. Over the last 4 years, Andrew has contributed numerous articles and posts about finance. You can find more articles from Andrew on australianlendingcentre.com.au or on his Google + profile.