Question

If you are a saver, how might you handle decreasing interest rates? A regular savings account may not yield the returns you desire. Are there other options available?

Answer 1

As a saver to handle decreasing interset rate first of all I will notice the previaling conditions in the capital market and bond market. Generally when interest rates are decreasing, equities perform well if economy if well performing. In this case shifting to the equities can be an option to handle decreasing interest rates.

Other wise , I may resort to hedging i.e. sekking interest rate futures. or buy long term bonds. shifting from short term bonds to Long term bond which can be held upto maturity to mitigate decreasing interest rates. So, short term bond can be sold as decrease in interest rate leads to rise in bond prices of old/short term bonds. So, selling short term bond at higher price and purchasing long term bond can be helpful in handling decreasing interest rates.

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