cautions investors against parking their money in a floating rate scheme they should be used for shortterm purposes park your money there only if you want to invest it in stocks via systematic transfer plans higher interest rates could also hurt you if you have an outstanding loan especially a housing loan according to financial experts interest rates on home personal and car loans are likely to go up and not just for prospective borrowers but also current ones if the current inflationary trend continues for sometime banks may be forced to hike rates on both floating rate as well as fixed rate loans says sundararajan the first casualty is likely to be floating rate borrowers they may see either their repayment tenure or their equated monthly instalment shooting up unfortunately theres no escape route here if you have large amount of money in fds consider a part prepayment advises sundararajan this will help you to bring your emi back down to earth if you have access to a soft loan from your employer or obliging friends or relatives take their help to prepay unfortunately your stock market investments wont be immune either from the interest rate shock since the banks have started hiking their prime lending rates even their best corporate clients will be forced to pay higher rates warns sundararajan this may translate into lower profits and the scaling down or postponement of capacity expansion plans adds tekchandani reduce your return expectations you should also scale down earnings projections and rework on your ratios like the pe he also says investors should avoid entering the market if theyre not ready to wait for at least 18 months if youre going to invest sundararajan says do so in defensive sectors like it fastmoving consumer goods pharmaceuticals and so on as they are relatively immune to interest rate shifts steer clear of the banking real estate and automotive sectors as their fortune hinges on the interest rate climate in the economy