August 15, 2023

Categories: Investment - Planning

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The maelstrom of rate hikes sees no sign of abating just yet, with recent news of US Federal Reserve policymakers poised to hike interest rates to the highest level in 22 years, while retaining a tightening bias that signals the possibility of an additional move later in the year. Bad news? Depends what you do with it!

As concerned investors, here are the two key areas to pay attention to:

Build Knowledge:

  • Keep track of updates from reliable financial news sources to understand the implications of the rate hike and its potential impact on various asset classes and the economy.
  • A significant rate hike in the US might lead to changes in currency exchange rates. Understand how currency movements can affect your investments and hedge against potential risks if necessary.

Assess Portfolio

  • Evaluate your investment portfolio to understand its sensitivity to interest rate changes. Some assets may perform better in a rising interest rate environment, while others may face challenges.
  • Ensure that your portfolio is diversified across different asset classes, sectors, and regions. Diversification can help reduce risk and insulate your portfolio from the impact of rate hikes.
  • Reassess your risk tolerance and financial goals. High-interest rates can lead to increased volatility in the markets, so make sure your investments align with your risk appetite.
  • Higher interest rates may lead to lower bond prices. Assess your bond holdings and consider shorter-term bonds that are less sensitive to interest rate changes.

Last but not least of all, you should consider speaking with a financial services consultant who can provide tailored advice and personalised guidance based on your specific financial situation and investment goals. Remember, any investment decision should be based on careful consideration of individual circumstances, and it is essential to make informed choices rather than react hastily to market events. Stay calm, stay the course and stay invested!

Disclaimer:‍‍‍‍‍‍ Investment carries certain risks. You should not just rely on results as an indication of your financial needs. You should understand and familiarise yourself with any investment and the associated risks before investing. You are also recommended to seek professional advice ‍‍‍before making any decision to buy, sell or hold any investment or insurance product.

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