Why low interest rates are hurting investors of all stripes

The problem is that low interest rates leave investors feeling rather comfortable in doing things they normally would not do and they encourage excessive risk taking.

\”When you combine ignorance and leverage, you receive some pretty interesting results.\” C Warren Buffett

There is a lot to be said for low interest: The majority of global equity markets have recovered and lots of are testing new highs; global bond markets have sent yields to new lows; and U.S. housing prices have bounced back nicely, as the Canadian housing market has made an idiot of all the doomsayers by continuing to push to record highs.

Investors, it\’s time to ask your adviser some tough questions

There has been no shortage of debate regarding whether the Canadian Securities Administrators (CSA) has gone too far – or otherwise far enough – with its new rules, but no one can deny that Canadians are presently subjected to the greatest advisory and management fees on the planet. Keep reading.

Rates have remained low for so long it has almost become the new normal. I recall listening in disbelief when my parents discussed the high double-digit rates of interest back in the 1980s and that i now wonder if my kids will think exactly the same when I tell them about rates of interest being at an astonishing 5% 10 years ago.

The issue is that low interest rates leave investors feeling rather comfortable in doing things they would not do plus they encourage excessive risk taking.

Some articles are mentioning that people in Calgary are investing in the equity markets and looking to get a conservative 7% or even more annual return simply because they have done a lot better than that in the past few years.

Why pay down that 3% mortgage when you can take out some low-cost margin and double-down on one\’s investment in the equity markets?


Categories: Economy

Tags: ,,,,

Leave A Reply

Your email address will not be published.