Securities that pay a fixed rate of return either in fixed periodic payments or via return of principal upon maturity are called fixed income investments. Common examples of such type of security are treasury bonds, municipal bonds, corporate bonds, exchange traded funds, annuities, money market accounts, and certificates of deposit.
Fixed income investments offer a few key advantages to their holders. One is predictability – since returns from these products are both expected and accounted for, fixed income investors don’t need to watch daily market movements closely because they aren’t affected by short-term fluctuations.
Furthermore, there are countless varieties available in a wide range of terms in the fixed income market. Any discerning investor can easily choose which fixed income products will suit their needs.
Lastly, holders of fixed income investments can opt not to trade when current asset valuations don’t appeal to them.
While fixed income investments are low in risk, their returns are historically lower than returns from equities trading. Additionally, they do not protect their holders during high inflation periods, when consumer goods cost more but the amount of investment returns remains the same.
Equities, on the other hand, are inherently riskier, but bring in a significantly higher payoff to their holders when the issuing company does well.
A good portfolio is one that reflects a balanced combination of fixed income and equity investments. Equities create opportunities for larger returns, while fixed income products maintain a net of safety for one’s portfolio.
An industry-savvy and ethical marketing executive in the financial sector with over fifteen years of experience in the alternative and traditional Investments arena, NYC-based Elizabeth Lesar has been maximizing revenue production by providing the best solutions for her clients’ investment needs. Follow this Twitter page for her news and updates.
elizabethlesar 