Impact of interest rates on investment returns

The impact of interest rates on investment returns is a crucial consideration for investors. Interest rates are the cost of borrowing money, and they affect the performance of various investment vehicles. The cost of borrowing goes up when interest rates rise, which lowers the value of bonds. The income from bonds' interest payments, however, rises. In contrast, as interest rates fall, bond prices increase but bond interest income declines. In a similar vein, interest rates have an impact on investments in stocks and real estate. Stocks might decrease with rising interest rates while rising with dropping interest rates. Making wise investing decisions requires an understanding of how interest rates affect investment returns.