Investing in a low interest environment

The collapse of 67 finance companies between 2006 and 2012, with a corresponding loss of $3 billion, should forever serve as a reminder to investors about the risks of chasing yield. But in the current low interest environment, this temptation could once again rear its ugly head.

After a period of stable interest rates, the Reserve Bank of New Zealand recently cut the Official Cash Rate to a record low of 1.5 percent and could reduce this further. The yields on government and corporate bonds have also reached all-time lows and have fallen