You may have seen our earlier article on how rising interest rates affect real estate investment trusts (REITs). REITs are highly sensitive to interest rate movements due to the way they’re structured. However, many other assets are affected by interest rates as well.  So how do interest rates affect them? In essence, interest rates act like gravity.

“Interest rates act like gravity on asset values – The higher the rate, the greater the downward pull. That’s because the rates of return that investors need from any kind of investment are directly tied to the risk-free rate that they can earn from government securities. So if the government rate rises, the prices of all other investments must adjust downward, to a level that brings their expected rates of return into line.” – Warren Buffett

If you’ve been following the news recently, you would know that interest rates recently ......