Fixed income securities are simply loans that investors make to corporate or government borrowers. These investments come in various shapes and sizes, where a fixed rate of return or interest in the form of dividends or coupons is paid to the investor on a regular basis until the security’s maturity date arrives.
When a fixed income security’s predetermined maturity date arrives, the principal amount of the investment is repaid in full to the investor or security holder by the corporate or government issuer.
The following are two of the most common types of fixed income investments available to aspiring investors.
US Treasury Bonds
These securities are direct debt obligations from the federal US government and are considered the safest kind of debt since the federal government is the only entity in the entire country permitted to print money. Revenue from these US Treasury bonds is used to raise capital for federal initiatives or to service existing outstanding debt.
Money Market Instruments
Issued by corporations or government entities, money market funds are open-ended fixed income mutual funds invested in debt securities such as banker’s acceptances, certificates of deposit, commercial paper, government securities, repurchase agreements, and other extremely liquid and safe securities. They have short maturity rates and run low credit risks.
For over fifteen years, Elizabeth Lesar has been maximizing revenue by building and nurturing relationships between investment firms and investor clients, with a focus on equities, fixed income, and alternative investment techniques, in the tri-state area of New York. For more information on her professional background and accomplishments, visit this blog.
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