A term deposit was right for then, but is it right for now?
Term deposit rates have steadied, but it’s still worth being aware of your options. An investment adviser can talk you through the benefits and relative risk of alternative strategies, and how those strategies can help you meet your goals.
This webpage does not contain financial advice - for financial advice, please speak to a Forsyth Barr Investment Adviser. They will discuss your financial situation and goals, and explain the risks associated with any potential investment.
Term deposit rates
In recent years, term deposits have been a dependable choice for many investors, offering competitive returns with minimal risk. They have provided a reliable source of income, making them an attractive option if you are seeking stable returns. Rates have eased from earlier levels and have now steadied, but they can change each time a term ends and you need to reinvest. If you are relying on term deposits to grow your wealth or maintain your current income, it’s worth considering alternative strategies that can offer both stability and the potential for higher returns.
A diversified portfolio
Developing a diversified portfolio tailored to your financial goals requires a thoughtful, long-term plan. This is where Forsyth Barr’s expert advice is invaluable. A financial adviser can assess your risk tolerance, income needs, and time horizon to create a strategy specifically for you. Your adviser will help you identify opportunities across different asset classes, ensuring your portfolio remains flexible and adaptable as markets evolve. Expert advice is particularly important in a low-interest rate environment, as making the most of your investments often involves exploring options beyond the traditional choices like term deposits.
The importance of advice
One of the most effective alternatives to consider is a diversified investment portfolio. Unlike term deposits, which focus solely on interest rates for returns, a diversified portfolio spreads investments across asset classes such as shares (New Zealand and International), bonds and property. This approach helps you balance risk and reward by tapping into different types of returns - shares offer growth potential, bonds provide stability and property can deliver regular income. Diversification ensures that no single market fluctuation unduly impacts your overall wealth, making it a resilient strategy as market conditions change.
Alternative investment strategies
As interest rates continue to decline, relying solely on term deposits to grow wealth or generate income is unlikely to be sufficient. A diversified portfolio, developed in partnership with a Forsyth Barr investment adviser, offers a compelling alternative that balances security with the potential for growth. By taking a proactive approach and exploring diversified investments, you can create a resilient investment strategy designed to weather changing economic conditions and support your long-term goals.
Specific investments
In responding to falling interest rates, there are also a range of individual investment alternatives that may deliver for you. Each delivers different benefits (and degrees of risk and opportunity) to balance.
Bonds
Compared to term deposits, bonds typically offer higher returns and more flexibility, as you can sell them before they mature. While they carry slightly more risk, they provide regular interest payments, similar to earning an "income" on your investment.
Equities (shares)
Unlike term deposits, shares have the potential for much higher returns over the long term through both growth in value and dividends. However, it’s important to consider the greater risk of fluctuation in value as markets move.
Managed funds
Managed funds provide diversification by spreading your money across a mix of investments, which can lead to higher returns than term deposits. They also offer professional management, giving you exposure to growth opportunities without having to pick investments yourself.
Become a client
Speak with one of our Investment Advisers to understand your goals and explore the options that are right for you.