News
When Interest Rates Rise...
Source: Grupo Aldesa
Tuesday, January 18, 2011
In a scenario of rising interest rates, the strategy to follow by investors should be of more activity.
Aldesa´s analysts explained in their blog, Pulse Securities, that when interest rates are falling, the investment advice is to invest soon and long-term, in order to ensure presumed higher performances than those available in the future and during the period of low interest rates. Normally this strategy is accompanied by a capital gain, as the title purchased with higher yields today it will rise in value as interest rates fall.
But when it involves a scenario of rising interest rates, the strategy to follow by the investor should be of more activity. This because as it seeks to invest in the short term, each time the investment expires, it can be reversed to better interest rates. However, this option is not very attractive because investment alternatives in the short term, or alternatively, cash, offer low interest rates.
In current scenario and for investors whose risk profile allows it, who do not want to pass on higher interest rates which normally characterizes long-term investments, needs to search for titles with relatively high yields, assuming a little more risk, having a wide margin which allows even under a scenario of rising interest rates, prices will not fall much.
Another alternative is to find markets that are conducive to economic situations characterized by low levels of risk, such as stock markets. Look for areas projected to have better economic performance during the year, and within them, the shares of firms which are more likely to grow.