Paul Martin's Business Update - January 29th

Paul Martin's Business Update - January 29th

The prospect of higher interest rates is one of those….it depends who you talk to kind of things. Some say they won’t be moving anytime soon. Others say it’s already begun and too few of us are prepared to deal with this development.

Globally, interest rates have begun to move as nations fight to protect their currency. Uncertainty about the economic prospects of emerging nations has prompted a flight to the safe haven of the world’s reserve currency – the American dollar. The result is a stronger US buck and falling secondary currencies - good for exporters in those nations but hard on imports which get more expensive and the prospect of inflation.

CIBC, in a report this week, said the era of low interest rates is over, advising a review of investment portfolios, especially for those who are retired or approaching retirement.

Higher rates impact fixed income holdings such as bonds. These have attracted investors who are looking for stability but now things are changing, and two-thirds of the baby boomers they surveyed had no idea that higher interest rates would affect their portfolios.

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