Interest rate hikes can be countered with positivity and flexibility

The recent spate of interest rate hikes has got many property owners worried about whether they can continue to pay their bonds and even whether their property, as an investment, is the right place to have their money.

Those who became property owners recently, in particular, who bought when interest rates were at a low, are now questioning the wisdom of doing so but we need to remember that property is a solid part of any investment portfolio and that interest rates have during past financial downturns between far higher than they are now.

Positivity is strength

People who sold in 2008 for example when interest rates were at their highest are now regretting it because they made the oldest mistake one can make with any kind of investment – they sold when the market was at its worst. As we all have learned, the rich and successful are those who buy in those times.

Before making the decision to sell we suggest you talk to your bank about a possible alternate arrangement that allows you to pay over a longer term, thereby reducing the bond payments. Remember Banks don’t want to face the legal issues of foreclosure and in most cases will be willing to be flexible.

Flexibility is the alternative

For homeowners who are not convinced that they should remain in property right now, however, and feel it would be more astute to sell and invest elsewhere, perhaps the best advice we can give is to speak to a Financial Advisor about it.

We advise property owners on the wisdom of selling in terms of their personal situation. Possibly there are simple financial solutions that allow them to keep their property through debt consolidation or juggling other investments, or we can discuss other investments that will create an alternative portfolio to a property-based one.

Buyers are hesitant

With regard to buyers, some are hesitant to buy right now and are waiting to see where interest rates go, as the word is that we may not have seen the last of them. Well, potential buyers should be reminded that whenever interest rates rise some owners get desperate and undervalue their property so this is essentially a buyer’s market – the best time to buy.

Having said that, for those who fear several more interest rate hikes in the years to come, there are numerous investment alternatives that could pay just as handsomely in your retirement years and some, like Retirement Annuities, are great tax savers too. Again we suggest you consult with a Financial Advisor to get good advice on whether it is right, given your personal situation, to get into property at this time or look to alternative investments that create a different kind of portfolio.

Take a holistic view

Hereford Group prides itself on not being in the business of just selling policies but always taking a holistic view of every individual’s needs and retirement goals. We will not encourage you to sell when times are tough in certain investment areas but to rather take a flexible approach and always maintain a portfolio which, in its diversity, will serve you well through all seasons.

Talk to us today before making any decisions on selling or buying property. Remember that as ‘half glass full’ kind of people we know that, like many other financial ups and downs, interest rate hikes can be countered with positivity and flexibility!


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