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Navigating Investments as Interest Rates Decline: The Case for Fixed Interest Investing

In a financial environment where declining interest rates are predicted, finding a safe haven for one’s investments is paramount. When diversifying your investment portfolio, we encourage you to consider an often underappreciated asset class which offers both stability and a compelling opportunity: fixed interest investments.

Why Consider Fixed Interest Investing?

Understanding the Essentials

Fixed interest investments, or fixed income securities, are debt investments that offer fixed interest payments at regular intervals, with the principal amount returned upon maturity. They can include assets such as government and corporate bonds, debentures, capital notes, fixed income securities, and term deposits.

At Australian Securities, fixed interest investments are debt instruments (private credit) manifested in the form of securitised debt or mortgage-backed securities. These investment opportunities can extend an array of diversification opportunities and the potential for elevated yields when juxtaposed against traditional fixed-income assets, offering refuge in the unpredictable climate of today’s economy.

The Benefits of Fixed Interest Investments

Why are Australian Securities’ fixed interest investments worth considering (especially in times of fluctuating markets)? They aren’t traded on the exchange markets and therefore, do not carry the risk and volatility that stocks do. Their primary allure lies in their ability to provide a predictable and steady income stream, essentially acting as a cushion against the ever changing nature of stock markets. Furthermore, they add a diversifying element to your investment portfolio, spreading risks across different asset classes.

Steady as she goes

Many investment types are negatively impacted when interest rates fall. The value of fixed interest investments through Australian Securities is their low-risk profile. We maintain a lower Loan to Value Ratio (LVR) than most banks or private lenders, with an average LVR across all mortgages of 43%*.

*Averaged across all mortgages as of 30 June 2023.

The impending decline in interest rates may reduce the value of higher-risk investments. However, Fixed Interest Investments locked in now will have far more attractive returns when interest rates fall, reducing the income or interest earned from many other types of investments.

Deciphering Risk vs. Reward

Not all investment opportunities are created equal. The security offered by fixed interest investments contrasts starkly with the higher risk of alternative lending options. One must remember higher returns are often associated with higher risk.

“People underestimate these risks; another risk is a loan loss, but with most of these portfolios, we think it’s relatively low risk. In a cycle, the losses tend to appear at the other end of a recession. So, if you can get 6 to 8 percent from vanilla stuff today, there’s no need to go higher up the risk curve from my point of view,” says Daryl Wilson, the chief executive officer of Affluence Funds Management. This sage advice underlines the importance of thorough research and due diligence. It’s crucial to partner with firms that prioritise not just the pursuit of returns but also the safety and security of your investment.

Why Choose Australian Securities?

With a legacy stretching back to 1925, Australian Securities stands out in the realm of ethical lending and smart investing. Our dedication to transparency, along with our approach of not pooling investments, offers our investors a sense of certainty and security not readily found elsewhere. Our investments are mortgaged, introducing an additional layer of safety, and our historical track record speaks volumes of our ability to navigate through varied economic climates.

Secure your future now

With the anticipation that interest rates will continue their downward trajectory in the coming years, now is the opportune moment to consider locking in fixed-interest terms. Australian Securities is not just a firm; it’s a partner in ensuring your investments align with both your financial goals and a sustainable future.

Protect your investment today

Are you ready to explore how fixed interest investments can fortify your portfolio amidst the expected economic shifts? Reach out to Australian Securities, where your pursuit of prosperity meets our commitment to ethical and secure investing. Call us on 1300 275 275 to talk to one of our Finance Managers or Lending Executives. We prioritise direct communication and personalised support for our clients.

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