Financial services

The variety of businesses within the financial services category make it difficult to predict the effect of rising interest rates on the industry as a whole. Consumer finance companies can raise their interest rates to balance their higher funding costs, but they may suffer from a weak demand for credit. Life insurance companies are less vulnerable to interest rate fluctuations because they pass the risk on to policyholders. Investment in the financial services industry is still a good long term investment, but most capital is likely to be put back into the business and not paid out in dividends.