The higher-for-longer reality of our world when it comes to interest rates is still sinking in for many investors. There are companies that trade at valuations that look impossibly high — and offer little in the way of growth and dividend yields — that are less appealing than a decent fixed deposit and certainly a government bond.

When interest rates are low, equities tend to vastly outperform fixed income alternatives. When rates are high, the gap becomes much smaller and only the best companies can deliver meaningful growth to shareholders. Remember, the test isn’t just whether the return is higher than a fixed income investment, it’s whether the return is substantially higher, as there is a lot more risk to buying shares. The proviso is that fixed income opportunities typically require you to lock up the money for a time, while shares have no such requirement...

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