How to Invest When the Interest Rate is Low

Since 2008, several investors have seen their investments fluctuate to the rhythm of the crisis. This volatile period naturally raises questions. Is this the perfect time to invest more or is it better to wait for a better period? Certainly now that interest rates on savings accounts are weakening, this discussion is more relevant than ever. We show you the way to smart investments in times of crisis.

 

Keep your head cool

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Due to the 2008 crisis, the central banks took measures to breathe new life into the economy. These measures had a positive effect on bonds. For example, investors received coupons of 5 to 9% for the riskiest bonds. Thanks to other support measures (quantitative easing and long-term loans from the central banks), the stock market also recovered.

According to our analysts, anyone who wants to take advantage of these macroeconomic circumstances is pretty cool. Leaving your savings and investments on a different course often leads to mistakes. Periodic investing is a good strategy. This way you reduce the impact of volatility on your equity portfolio. Buying shares from companies from developed countries that pay dividends can also be an interesting approach.

 

Premium Funds Selection

Premium Funds Selection

According to our analysts, the Premium Funds Selection has the best funds on the market. The equity funds from this selection have a higher risk, but often provide higher returns than the current savings rate and then the interest on high-quality bonds. Investing part of your savings in such types of funds can turn out well for your portfolio. To succeed, we naturally take your investor profile into account.

 

Stay informed and dynamic

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If you are not an experienced investor, it remains impossible to predict the evolution of the financial markets on a daily basis. Will investors buy or sell in the markets of tomorrow? Much depends on the confidence that you, too, place in these markets.

Price falls offer an interesting opportunity to buy shares at a low price. But macroeconomic evolutions also have an impact on stock markets. As:

  • The elections in Brazil, a country where prices are attractive in the long term
  • The recovery in the raw materials sector (sugar and cocoa for example)
  • The new dynamics in various sectors, such as the health sector
  • Mergers and acquisitions (AT&T and Direct TV, Apple and Beat Electronics, …).

Everything indicates that some of the major themes are still relevant. Your financial adviser can help you make the right choices.

 

Don’t forget the bonds

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According to our analysts, interest rates in Europe are being kept artificially low in the long term. When the Daisy Bank lowers the interest rate, the number of bankruptcies also falls because companies can borrow money cheaper. This low interest rate is also positive for holders of bonds with a high return.

Purchasing bonds with a fixed term that offer coupons within a set term is therefore an interesting strategy. Funds that actively manage bank debt are just as attractive. After all, the bonds that they offer take advantage of the rise in interest rates in the long term. At Juan Weliss we offer multiple funds with different risk profiles and a flexible nature. Because you can choose from different bond classes, your portfolio is well diversified and you can anticipate later interest rate rises.

In addition, there are opportunities in mixed funds that pay out coupons of more than 3%. Some mixed fund managers try to generate high and constant income by combining positions in both bonds and shares. This allows them to optimize their income distribution and limit exposure to riskier and more volatile stock markets.