How to take advantage of rising interest rates?

Francisco Javier Casado

02/02/2023

What is the interest rate?

The interest rate is the value of money established by the monetary policy of a central bank in the short term and serves as the cost of financing for companies. High interest rates make it difficult for companies to obtain financing, affecting their activity and investment. On the other hand, low interest rates increase the level of investment and exports, but they can generate significant deflation in wages combined with an increase in inflation.

So, how can we take advantage of interest rate increases?

The answer is simple: by becoming a lender (someone who lends capital) and avoiding the role of borrower (someone who receives capital). With a high interest rate, we will pay more interest on the borrowed capital, so it is better to opt for savings financial products.

What kind of financial products can we use with a high interest rate?

Savings accounts are a common option as they offer an interest rate between 0.2% and 1% APR (Annual Percentage Rate). Fixed-term deposits are another alternative. It is a savings product in which custody of a sum of money is entrusted to the financial institution, and in return, the capital plus interest is recovered after the established period. In general, the interest rate ranges from 1% to 5% APR.

These savings financial products have several advantages. First, they help us make a profit from our saved money without it losing value. Additionally, they are not subject to investment risks and help us combat annual inflation. Lastly, they are easy to monitor and control through the financial institution.

In summary, taking advantage of high interest rates is simple. We just need to become lenders and choose savings financial products such as savings accounts or fixed-term deposits. This way, we can profit from our saved money without risking it in investments and combat annual inflation. If you want to learn more about banking products where you can invest your money without risk, feel free to contact our team!

Francisco Javier Casado

CASA D’OR Investment is a project that was born as a consequence of the increase in activity among individual investors, due to the lack of financial education and how it affects society.