Since the beginning of this calendar year, the Bank of Canada has raised its benchmark interest rate on five occasions.
And while there are concerns about the impact on people’s bottom lines, one financial advisor says the hikes can present an opportunity for some.
“The rising interest rate doesn’t necessarily mean a change in lifestyle or something to panic about,” financial advisor Kevin Kranzler said.
The central bank’s interest rate currently sits a 3.25 per cent. Kranzler suggests making that figure work for you.
“(If) you’ve got a little extra cash sitting there, throwing it in a savings account isn’t a bad idea,” Kranzler said.
“It will pay a little higher interest than it was in the past couple months. As interest rates go up, so will the interest rates on your savings account.”
He adds there are other options available if you’re looking at diversifying your portfolio.
“It’s also a great time to get into the market as well, not just into bonds or (guaranteed investment certificates) but into actual stocks,” Kranzler said.
And these elevated rates could be sticking around.
“We’re almost certain to see a couple interest hikes in the near future. At the least, maybe two or three more,” said Vishaal Baulkaran, an associate professor of finance at the University of Lethbridge Dhillon School of Business.
While Baulkaran agrees people can take measures to use the current economic climate to their advantage, he also believes most Canadians won’t see any significant benefits for several months.
“The biggest winner for individuals would be in the more medium term, if the Bank of Canada is able to get it right with their monetary policy and these interest hikes tame inflation,” Baulkaran said.
A plan many would like to see yield results sooner rather than later.