Fixed Deposits & Bonds
Fixed Deposits
& Bonds
Fixed Income
Fixed income is an asset class that returns an amount to you on a regular schedule. The most common are pensions, bonds, and loans. Fixed income as an asset also includes certificates of deposit, savings accounts, money market funds, and annuities which are generally short-term in nature. You can also invest in fixed income securities with bond mutual funds, exchange-traded funds, and fixed income derivatives.
Government bonds, Corporate Bonds, Debentures (NCDs), Tax-free & Taxable bonds, Interest Rate Futures, and Corporate Fixed Deposits are few types of fixed income securities which an investor can purchase or sell through primary as well as secondary market.
Benefits of Fixed Income
- It ensures a fixed return or income and balances risk involvement and protects the capital to the extent invested in debt instruments.
- It reduces the overall risk of asset allocation or investment strategy weighted heavily in the stock market.
- Fixed income securities are more stable than pure equity holdings.
- It provides investors with a steady stream of income generated from a portfolio’s balance. Bonds, Preferred Stocks, and CDs, all pay a steady dividend and interest payments to investors, creating a consistent cash inflow to investors.
- Reduces tax expense by investing in tax-free bonds.
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