Fixed Income
Fixed Income
Fixed-income securities are essentially loans. An investor lends money to a government or company and receives regular interest payments plus the return of principal when the bond matures.
The category spans everything from ultra-safe Treasuries to high-yield corporate debt, with risk and return rising as credit quality falls. Prices move inversely to interest rates, so rising yields hurt existing bonds.
Within a portfolio, fixed income traditionally provides income and a cushion against stock-market volatility. How much an investor allocates to it depends on goals, time horizon, and appetite for risk.
Example
A retiree might hold a large fixed-income allocation to generate steady interest income and reduce portfolio swings.
Fixed Income — FAQ
What is Fixed Income?
Fixed income refers to investments that pay a set schedule of interest and return principal at maturity, most commonly bonds issued by governments and corporations.
Can you give an example of Fixed Income?
A retiree might hold a large fixed-income allocation to generate steady interest income and reduce portfolio swings.
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