What rising and falling interest rates do to your shares

Interest rates are the price of money, and when that price changes, the value of almost everything else shifts with it. That's why an RBA decision can move your portfolio even if not a single company you own reported any news.

The simple mechanism

When rates rise, safe options like term deposits and bonds pay more. That makes riskier shares look relatively less attractive, so prices tend to ease — especially for companies whose value rests on profits far in the future. When rates fall, the reverse happens: shares look more appealing again.

Not everything reacts the same

• High-growth companies often swing the most, because their value is mostly 'later'.
• Property trusts and other borrowers feel changes in their interest bills directly.
• Banks are a mixed bag — rates affect both what they earn and how many loans go bad.

Rates don't just affect borrowers. They quietly reprice every share you own.

You can't control the RBA. But you can know which of your holdings are most rate-sensitive, so the next move is something you've already thought through rather than something that catches you out.

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