"The investors see their interest rates dropping but also they are concerned about retaining their capital. With the credit crunch, some people have already lost what they had.
"That's why they are sticking to fixed interest. It gives them less income but protects their capital."
It was the right time to be locking in bonds at "reasonable rates" rather than waiting for the next interest rate cut which could see the Reserve Bank's official cash rate fall to 2.5% or 2%, he said.
With rates down at 2%, a bond rate of 4% to 5% was quite attractive. A lot of bond issues would be coming on to the market soon.
It was likely banks would issue bonds and dairy company Fonterra had indicated it would be raising capital.
Businesses would want to lock in borrowing now at an attractive rate for 5 years and they too would go to the market, Mr Conroy said.
Forsyth Barr had fixed interest portfolios across a conservative, balanced and high yielding range of investments that offered returns from around 6.4% to more than 8%.
Reid Asset Management principal James Reid said investors should not be panicked into making a rash re-investment decision when a term deposit matured.
"Be very wary of alternative investments in what remains a difficult financial environment."
Mr Reid also predicted that New Zealand companies could go to the market with new fixed interest products.
The companies would see now as a good time to raise funds from the public given that bank deposits were offering such a poor return.
"While some offers will be worthy of consideration, there will be others that potentially could lead to capital risk and therefore should be avoided."
Particular attention should be paid to the underlying security of the company, where the security ranked in order of preference, the Standard & Poor's rating and the term of the investment.
Any potential issues that were for a period of up to two years, and fell under the government deposit guarantee scheme, should be given priority, he said.
Longer-term fixed interest offers should be treated with caution given the potential for the Reserve Bank's current monetary settings to be inflationary, pushing interest rates higher in coming years.
"There is unlikely to be any visible signs of inflation over the next 12 months. Locking in the majority of your funds in excessively long-term investments to achieve a higher rate would be a mistake."
Higher-yielding New Zealand shares could be considered as part of a portfolio to improve the overall return and provide a hedge against future inflation.
It was likely there were many companies which would not be able to sustain their dividends in the current environment and investors who bought those shares for their future income would be disappointed, Mr Reid said.
"There are a number of analysts who are too optimistic regarding future company dividend payouts."
If investors opted to stay in term deposits they should shop around. The major trading banks would continue to offer special rates. Unfortunately, there were not as special as they were a few months ago.
