Fixed interest: A primer on rate risk

Key Points Term deposits don’t have much exposure to interest rate movements Rules of thumb for estimating your risk Building your fixed interest portfolio      In fixed rate bond today is betting that floating rates will be lower over the next five years. For bonds, which are traded, a bad bet is reflected in a lower price. Term deposits aren’t traded like bonds, so movements in interest rates aren’t reflected in the price – you just miss out on higher rates. Either way, small movements in rates won’t have much impact on your returns but big moves will. This is...

In fixed rate bond today is betting that floating rates will be lower over the next five years.

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