Is your portfolio ready for higher interest rates?
BNNBloomberg
By Dale Jackson
The Bank of Canada's decision to start raising its benchmark interest rate this week should come as no surprise to anyone who has been paying attention to their investment portfolios.
The alarm bells for higher borrowing rates have been sounding for over a decade after central banks slashed them to near-zero in the wake of the 2008 global financial crisis.
- Since then, rates have ebbed and flowed in a tug-of-war between inflation and recession. Most recently, it was the fear of a recession from pandemic-induced lockdowns that kept rates low. Now, concern over long-term inflation as restrictions are lifted have spurred this week’s increase.
For long-term investors saving for retirement, it’s neither good nor bad - just different. A properly-diversified portfolio should be flexible enough to adapt to the potential tectonic shift about to take place.
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