Investing

Key takeaways
It’s important to remember that interest rate increases are gradual, and while uncomfortable now, they will help to control rising inflation
Interest rate rises can affect your super balance depending on how your retirement savings are being invested
When reviewing your finances, consider building a buffer for further rate increases that might affect your mortgage repayments and speak to a financial adviser.

Recent sharp falls across share and bond markets have been a shock, but not a surprise.

Sharp investment market falls are always jolting. However, they have not been a surprise given economic conditions, especially inflation being at multi-decades highs around the world.

Moreover, markets have been jittery since the back end of 2021 as investors began to digest the prospect of central banks raising interest rates to combat rising inflation. In that sense, current events are an outpouring of that build-up of worry.

The volatility that we’ve seen over the last six months, while significant, is not an unusual occurrence for a normal and healthy functioning market. Despite the recent heightened volatility being an uncomfortable experience in the short- term, equity markets and some parts of the bond markets will continue to be an important contributor to overall long-term returns.
We appreciate that the current environment looks concerning given falls in markets and likely further interest rate rises during 2022, with the possible risk of recession, however it is important to continue to stay invested and manage your portfolio in line with your long-term objectives, aligned to your risk tolerance. We would encourage investors to discuss their portfolio with their adviser to ensure that it meets their personal needs, objectives and is in line with their risk tolerance.