What is Fixed Income?
Fixed Income refers to financial instruments where the borrower or issuer is required to make
fixed payments on a predetermined schedule. The term is also used to describe an individual's
income that remains relatively stable over time.
Key Features of Fixed Income
- 📌 Predictable and stable returns over time.
- 📌 Lower risk compared to equities.
- 📌 Common examples include bonds, preferred stocks, and
pensions.
- 📌 Used by investors for capital preservation and steady income.
Types of Fixed Income Investments
- 📊 Government Bonds – Issued by national governments with
low risk.
- 🏢 Corporate Bonds – Issued by companies with varying levels
of risk.
- 🏦 Municipal Bonds – Issued by state or local governments,
often tax-exempt.
- 📈 Fixed Deposits (FDs) – A safe investment with guaranteed
returns.
- 💰 Pension Plans & Annuities – Provide a fixed income stream
post-retirement.
Why Invest in Fixed Income?
Investing in fixed income instruments offers stability, making them ideal for risk-averse
investors. These investments help in:
- ✅ Diversification – Reducing overall portfolio risk.
- ✅ Regular Income – Providing steady cash flow.
- ✅ Capital Preservation – Safeguarding wealth from market
fluctuations.
