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Fixed income

POSTED ON JANUARY 28, 2022    

What it is

In investing, fixed income usually refers to certain investment vehicles called fixed-income securities. These are a type of debt security that pays you a set amount of money at regular intervals.


Fixed-income instruments usually have a maturity date, although certain products such as perpetual bonds will continue giving you returns for as long as you hold them.


Fixed income is also sometimes used to refer to an investing strategy that focuses on both income generation and capital preservation (protecting your money and avoiding loss).


What it means for you

The main advantage of fixed-income instruments is their predictability. Because you know how much you’ll get and when it’ll arrive, you’ll be able to factor those into your future plans.


Of course, such assets are very useful when you want to invest for income, especially when you’re investing for retirement. However, even if you have a different money goal, keeping some fixed-income instruments in your portfolio may be a good idea.

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