When Interest Rates Break Something
Interest rates don’t jump from near zero to around 4% without consequences and when they do, investors start asking the same urgent question: what breaks first? We talk through the shockwaves from the Silicon Valley Bank deposit run and why governments move fast to protect confidence in the banking system. Then we bring it back home to Australia, where our banks are more tightly regulated and better capitalised, but we’re still tied to global markets and the mood of investors worldwide.
From there, we get practical. We tackle the classic dilemma of whether to pay down your mortgage or invest, especially when rates may be nearing a peak and share markets could stay bumpy for months. We also unpack why bond markets can look “deeply worried” even when equities seem oddly calm, and what that mismatch might mean if you’re nearing retirement and need a more defensive investing approach.
Listener questions take us into real-world choices: using salary sacrificing to manage tax brackets, putting an inheritance into a term deposit, and weighing bank shares with attractive yields against the certainty of a 4% to 4.5% term deposit rate. We also share a straightforward way for younger investors to build exposure to diversified ETFs by averaging in over time, rather than trying to pick the perfect day to buy.
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