This year’s continual rise in interest rates is affecting a range of investment strategies from SMSF to low doc borrowers to a diverse range of investments.  The good news is there is light at the end of the tunnel.

We’ve seen negative returns in 2022 across most investment options.  This is because share markets tend to react to changes in interest rates.

Investments in property can be impacted by rising interest rates because they tend to reduce borrowing capacity for investors and borrowers.  Higher interest rates can also slow down the property market by reducing demand.

Fixed interest investments, like bonds, may also be impacted by long-term interest rate rises.  In this circumstance, the price of bonds will typically fall.

Longer term returns on investment options are positive.  Any volatility is usually short term.  When people stick with their investment strategy and remain invested, they are generally rewarded in the long run.

It’s important to take a long-term view when looking at your super. If you make regular contributions to your super, you’re now investing in markets that are lower priced than they were a year ago.

Super is a long term investment that will inevitably go through all sorts of market conditions over the years including high interest rates, low interest rates, market downturns, and market booms.  It’s part of the life cycle of investing.

There is a broad range of investment options suitable to those who may have a lower tolerance when it comes to the volatility of their investments.  For instance, depending on your personal circumstances, a cash fund or a term deposit may be suitable if you’re investing for the short to medium term and want a known outcome for your funds, without worrying about market volatility.  This strategy ensures you keep your money invested in super, while also benefiting from the more protective nature of a term deposit.

If you’re concerned about the impact of the rising interest rates on your super, or if your investment strategy isn’t appropriate for your stage of life, the best option is to speak to a financial adviser.  They can help you determine if your super and investments are still on track to reach your financial goals. Schedule a consultation with Micah Finance Solutions to provide initial investment assistance on your portfolio.

Investment Disclaimer:

The above does not take into account your objectives, financial situation, or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation, and needs.