Whilst borrowers enjoy lower borrowing costs, savers are left wondering what on earth happened as their term deposits (TDs) roll off to much less palatable rates. Bonds and infrastructure investments may be a savvy strategy during a rate cut cycle.
Bonds, particularly those issued by governments or reputable companies, could be a valuable addition to your portfolio. When interest rates fall, bond prices tend to rise, which means your investment could appreciate in value. Plus, bonds provide regular interest payments, which continue to deliver a reliable income stream.
But if you’re looking for something a bit more grounded, infrastructure investments might be your ticket. Picture this: investing in the roads, bridges, and utilities that keep New Zealand ticking. Infrastructure assets usually generate stable, long-term cash flows and tend to be less affected by the ups and downs of the economy. Plus, many of these investments are linked to contracts that adjust for inflation, offering some protection against rising prices. With the government and private sector likely to keep pumping money into infrastructure to spur growth, these investments could be a solid bet, with a little more risk.
Don’t let declining TD rates rain on your financial parade. Bonds and infrastructure investments offer alternatives that could keep your money working hard, even when interest rates are falling.
Talk to us about our Property & Infrastructure Fund. We also have a range of Australasian and Global Equity Funds along with Fixed Income that may complement a total portfolio.
Pie Funds Management Limited is the issuer of interests in the Pie Funds Management Scheme and the Pie KiwiSaver Scheme (’the Schemes’). Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Schemes, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For more information about how we can help you, or to see our product disclosure statements for the Schemes, please visit www.piefunds.co.nz.