Interest Bearing Securities

Investors looking for security to capital and regular income should invariably look to interest bearing investments.

There are a wide range of interest bearing investments available. They range from NZ Government Stock (which offers the highest security available from a NZ based issuer), Local Authority Stock, Corporate Bonds and Capital Notes, Debentures, and Term Deposits.

It is important that investors carefully consider the merits of every investment before committing their hard earned capital, because each investment will be different in terms of security, maturity, repayment terms, and interest return. The old saying “the greater the return, the greater the risk” should be considered. In our experience, most fixed interest investors are seeking security of capital, and a sound return on their capital, but many overlook the merits of investing in listed fixed interest securities also due to their perceived complexity.

Considerations of investing in fixed interest investments should include:

• issuer – who am I loaning my money to?
• interest rate being paid, and can it change?
• security offered – rated versus non-rated
• negotiability (the ability to sell or realise the investment should your requirements change). Debentures and bank deposits are not marketable securities so can’t be sold prior to maturity.
• interest payment dates, which will provide regular cash flow
• maturity dates, to ensure that investors have a suitable spread of investments over several years thereby removing the interest rate cycle risk.

A number of opportunities exist for both short and long term fixed interest investments, and our experienced NZX accredited Financial Advisers can advise you on the most suitable options for you.

It is important that investors carefully consider the merits of every investment before committing their hard earned capital, because each investment will be different in terms of security, maturity, repayment terms, and interest return. The old saying “the greater the return, the greater the risk” should be considered. In our experience, most fixed interest investors are seeking security of capital, and a sound return on their capital.

We suggest that you contact us to discuss your options. It pays to check with us first.