Investors should consider locking in fixed rates

Falling interest rates mean investors should consider locking in fixed interest investments now

As we kick start the new year, we thought you might be interested in the following comments from Alan Williams, MARAC’s Chief Financial Officer. As per the comments below, MARAC expects to see an increase in longer-term fixed interest investments over the next quarter as people look for more certainty around their investment returns.

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Comments attributable to Alan Williams, MARAC’s Chief Financial Officer:

“Many New Zealand investors, and especially pensioners, rely on income from fixed interest investments. With fixed interest rates falling in New Zealand by approximately 30% during the past 12 months, and with another cut in the Official Cash Rate expected towards the end of January, many investors face uncertainty as to the return on investment they can expect.

“In qualitative research we conducted in 2008, we found that many investors have a trusted group of friends, family members or colleagues that they feel are knowledgeable about financial matters. Although many investors take professional financial advice, it is likely that many investors have more time during the holiday period to sit down with their friends and family to discuss their investment strategy, financial priorities and talk about the year ahead.

“As New Zealander’s come back from holiday, we anticipate seeing an increase in investors considering and locking in longer term fixed interest investments. With interest rates likely to fall further, locking in longer fixed interest terms will enable investors relying on this type of investment to take advantage of the current higher long term rates before they potentially fall further.

“With so much uncertainty remaining in the market, longer term fixed interest investments are providing a level of certainty around the level of return investors will receive and this is an attractive option for many investors.”

ENDS

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