Article written by Cath Lomax, Fisher Funds – 17th September 2020

This year has been a year of firsts. In the financial world the latest to make it to the list of firsts was our historically low Official Cash Rate (OCR) which hit a new low in March this year. With interest rates at record lows, what can investors do to make their money work harder for them?

Interest rates low and potentially heading lower

The OCR influences the interest rates on both mortgage rates and savings accounts, including the term deposits that many New Zealander’s hold at banks. In March 2019, many New Zealanders thought that OCR wouldn’t go any lower than 1.75%, by March 2020 the OCR was at 0.25%. As interest rates move lower it is good news for borrowers – but bad news for savers. The interest rate you could earn on a term deposit on a one year term with the main banks is now less than 1.5%.

The outlook is that there is more change in the wind – last month we wrote how the Reserve Bank have encouraged financial institutions to prepare for negative rates, due to the ongoing impacts of the global pandemic on our economy. This has left many Kiwis wondering what they should do with their term deposit when it matures.

What can investors do to make their money work harder?

One option is a managed fund, which are becoming increasing popular for Kiwis. A managed fund is an investment that is managed by a professional investment manager on your behalf and your money is pooled with other investors’ money. These investments generally invest in a range of different assets like cash, fixed interest, shares and other investments.

Many Kiwis find a managed fund is a good way to gain exposure to the share market. The hard work is done for you as you don’t have to decide which companies to invest in. At Fisher Funds our investments are managed by our team of experts – we have one of the largest most experienced investment teams in New Zealand. We offer a range of flexible managed fund options to choose from, and advisers and tools to help you work out what is right for you.

Options for all investor types

If you have a shorter investing time frame or prefer to take on less risk we have options like our Income Fund and Conservative Fund. If you are growth investor we have a growth fund, or single sector funds that allow you to invest in a specific area – like international shares. And if you’re in between we have a balanced strategy.

Over the longer term, managed funds will generally produce better returns than term deposits, and the right investment option for you will come down to understanding your goals and your investment timeframe. Our advisers can help you work out your risk profile, or you can do it yourself with our online tool.

If getting your money to work harder for you is something you’re interested in, then now is a good time to chat. Our team of expert financial advisers are here to help you work out what is right for you.