{"id":4124,"date":"2022-12-22T10:23:00","date_gmt":"2022-12-22T10:23:00","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=4124"},"modified":"2023-12-22T14:22:32","modified_gmt":"2023-12-22T14:22:32","slug":"fixed-income-instruments","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/fixed-income-instruments\/","title":{"rendered":"Fixed Income Investments &#038; Risks Involved:"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662fbc0a8d1da\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-662fbc0a8d1da\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#What_are_Fixed_Income_Investments\" title=\"What are Fixed Income Investments?\">What are Fixed Income Investments?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#How_Does_Fixed_Income_Work\" title=\"How Does Fixed Income Work?\">How Does Fixed Income Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Most_Known_Fixed_Income_Securities\" title=\"Most Known Fixed Income Securities:\">Most Known Fixed Income Securities:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Corporate_Government_Bonds\" title=\"Corporate &amp; Government Bonds\">Corporate &amp; Government Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Money_Market_Instruments\" title=\"Money Market Instruments\">Money Market Instruments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Treasury_Bills\" title=\"Treasury Bills\">Treasury Bills<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Asset_Securities_Backed_ABS\" title=\"Asset Securities Backed (ABS)\">Asset Securities Backed (ABS)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Features_of_Fixed_Income_Investments\" title=\"Features of Fixed Income Investments:\">Features of Fixed Income Investments:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Why_Fixed_Income_Instruments_are_favored_amongst_Indians\" title=\"Why Fixed Income Instruments are favored amongst Indians?\">Why Fixed Income Instruments are favored amongst Indians?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Risks_involved_in_Fixed_Income_Instruments\" title=\"Risks involved in Fixed Income Instruments:\">Risks involved in Fixed Income Instruments:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Coupon_Rate_Unchanged\" title=\"Coupon Rate Unchanged&nbsp;\">Coupon Rate Unchanged&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Liquidity_Issues\" title=\"Liquidity Issues\">Liquidity Issues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Inflation_Worries\" title=\"Inflation Worries&nbsp;\">Inflation Worries&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#What_Should_Investors_Do\" title=\"What Should Investors Do?\">What Should Investors Do?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Fixed_Income_Instruments_During_Recession\" title=\"Fixed Income Instruments During Recession:\">Fixed Income Instruments During Recession:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#FAQs\" title=\"FAQs:\">FAQs:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#For_More_Information_Check_this_Video\" title=\"For More Information, Check this Video:\">For More Information, Check this Video:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/rakshithpai.com\/fixed-income-instruments\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Fixed_Income_Investments\"><\/span><strong>What are Fixed Income Investments?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Fixed-income investments are those that pay investors a fixed rate of interest or dividends until the instrument matures. Since the Fixed Income Instruments do not provide Capital appreciation. Investors are reimbursed for the principal amount invested at maturity.&nbsp;<\/strong><\/p>\n\n\n\n<p><strong>For example;<\/strong> Fixed deposits (FDs), Corporate &amp; Government Bonds, Provident Funds, etc.<\/p>\n\n\n\n<p>Fixed-income instruments are financial securities that provide guaranteed returns while also protecting the investor&#8217;s cash. They are immune to market fluctuations and provide a set rate of interest for the duration of the investment.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>If your risk tolerance is moderate or low, you can use a fixed-income instrument to grow your financial corpus for various life goals. The following are some of the many fixed-income strategies that you might consider investing in and including in your portfolio.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Does_Fixed_Income_Work\"><\/span><strong>How Does Fixed Income Work?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The word &#8220;fixed income&#8221; refers to the interest payments received by an investor, which are determined by the borrower&#8217;s creditworthiness and current interest rates. In general, the longer the maturity of fixed-income products such as bonds, the greater the interest rate, referred to as the coupon.<\/strong> But, in some cases, the short-term maturity bonds are valued high over the longer-term bonds.<\/p>\n\n\n\n<p>The borrower is willing to pay a higher interest rate in exchange for the ability to borrow money for an extended period of time. At the end of the term or maturity of the security, the borrower pays back the money they borrowed, which is called the principal or &#8220;par value.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Most_Known_Fixed_Income_Securities\"><\/span><strong>Most Known Fixed Income Securities:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Corporate_Government_Bonds\"><\/span><strong>Corporate &amp; Government Bonds<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>A bond is a kind of debt security. <\/strong>Like an IOU, borrowers offer bonds to investors who are ready to lend them money for a set period of time. When you invest in a bond issued by a government, municipality, or company, you are extending financial support to the issuer in exchange for a charge for service called interest on bonds.<\/p>\n\n\n\n<p><strong>Bonds constitute a whole field of financial or investment products in and of themselves. <\/strong>They can be broadly characterized as loans made by investors to an issuer with the promise of repayment of the principal amount at the specified maturity date, as well as periodic coupon payments (usually every six months) representing interest on the loan.&nbsp;<\/p>\n\n\n\n<p>The purpose of these loans varies considerably. Typically, bonds are issued by governments or companies seeking to finance projects or operations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Money_Market_Instruments\"><\/span><strong>Money Market Instruments<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These instruments are often traded on organized markets at a discount from face value, with the amount of the discount being a function of the interest rate and the length of time until maturity. <strong>The owner of a money market instrument has the absolute right to receive a predetermined amount of money on a predetermined date.<\/strong><\/p>\n\n\n\n<p><strong>Commercial paper, banker&#8217;s acceptances, certificates of deposit (CD), and repurchase agreements (&#8220;repo&#8221;) are all examples of money market products.<\/strong> Treasury bills are legally included in this category, but owing to the huge amount of trading they see, they have a life of their own.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Treasury_Bills\"><\/span><strong>Treasury Bills<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Treasury bills, often regarded as the safest short-term financial instrument, are issued by the country&#8217;s federal government. These securities often have maturities of 28, 91, or 182 days (one month, three months, or six months). These instruments do not have a fixed coupon or interest rate.<\/p>\n\n\n\n<p>They are sold at a discount to their face value, the difference between the face value and the discounted value is the interest rate they give investors. As a basic example, if a Treasury note with a face value of Rs.100, or par value, sells for Rs.90, it offers about 10% interest.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Asset_Securities_Backed_ABS\"><\/span><strong>Asset Securities Backed (ABS)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Asset-backed Securities (ABS) are debt instruments backed by &#8220;securitized&#8221; financial assets such as credit card receivables, auto loans, or home equity loans.&nbsp;<\/p>\n\n\n\n<p>An ABS is a collection of such assets bundled into a single fixed-income instrument. Asset-backed securities are frequently preferred by investors over corporate debt.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/o9ywmduow8i-1024x683.jpg\" alt=\"fixed income investments types and features\" class=\"wp-image-4126\" style=\"width:1183px;height:789px\" srcset=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/o9ywmduow8i-1024x683.jpg 1024w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/o9ywmduow8i-300x200.jpg 300w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/o9ywmduow8i-768x512.jpg 768w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/o9ywmduow8i-1536x1024.jpg 1536w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/03\/o9ywmduow8i.jpg 1600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Features_of_Fixed_Income_Investments\"><\/span><strong>Features of Fixed Income Investments:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol>\n<li>They offer low-risk, low-return type investments.<\/li>\n\n\n\n<li>Insurance for difficult times. They provide safety as you can take a loan against these instruments during Unfortunate times.&nbsp;<\/li>\n\n\n\n<li>A passive source for a regular stream of income.&nbsp;<\/li>\n\n\n\n<li>Tax Benefits.<\/li>\n\n\n\n<li>Flexible tenures with optimum options for liquidity.<\/li>\n<\/ol>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-vivid-green-cyan-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/etmoney.onelink.me\/unJQ\/RakshithPai\" style=\"border-radius:50px;color:#0f0027\" rel=\"nofollow\"><strong>ET Money Genius!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Fixed_Income_Instruments_are_favored_amongst_Indians\"><\/span><strong>Why Fixed Income Instruments are favored amongst Indians?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Most Indians especially those born before the 1980s do not view the Stock Market as the Millennials do. Millennials prefer to take risks and be more adventurous.<\/strong> Hence, nowadays we see many in India coming into the Stock Market, some even going into other risky assets such as Crypto. But, the non-millennials prefer Safety over Better returns.<\/p>\n\n\n\n<p>Thus, until now, most Indians park their savings under various Fixed Income Investments.&nbsp;<\/p>\n\n\n\n<p>But, these Fixed income instruments aren&#8217;t safe in ways that truly matter. I mean, in the eyes of Inflating money circulation, and the aftermath depreciation of purchasing power. The Fixed Income instruments lack to entice the new generational investors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risks_involved_in_Fixed_Income_Instruments\"><\/span><strong>Risks involved in Fixed Income Instruments:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The primary risk associated with fixed-income securities is that the borrower will default on their obligation. Such risks are reflected in the interest or coupon rate offered by the asset, with securities having a higher risk of default providing investors with higher interest rates.<\/strong><\/p>\n\n\n\n<p>Additionally, Fixed Income Instruments include exchange rate risk for assets denominated in a currency other than the US dollar (for example, foreign government bonds) and interest rate risk, which is the risk that interest rate fluctuations would affect the market value of a fixed-income security an investor owns.<\/p>\n\n\n\n<p>For instance, if an investor owns a 10-year bond paying 3% interest and interest rates rise and new 10-year bonds are released paying 4% interest, the investor&#8217;s bond paying 3% interest becomes less valuable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Coupon_Rate_Unchanged\"><\/span><strong>Coupon Rate Unchanged&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Fixed income instruments as the name suggests, are Instruments providing fixed rates of income to investors. <\/strong>This becomes a hassle when the interest rates rise and you are locked in your investment with lower rates.&nbsp;<\/p>\n\n\n\n<p>For example, right now FD offers 6 to 6.5%, if you subscribe to FD now and in the coming 2 years as the interest rates rise, you are at a disadvantage for you are holding an instrument with reduced rates.&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Liquidity_Issues\"><\/span><strong>Liquidity Issues<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Although Fixed Instruments provide optimum liquidity, they are not the most feasible option when in need. <strong>Because pulling out funds from these investments as and when needed can attract penalties. We call it the Premature withdrawal penalty.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inflation_Worries\"><\/span><strong>Inflation Worries&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is probably the most important risk. The one that\u2019s not vividly known amongst investors. <strong>Imagine owning a Fixed Income instrument that gives a 6% return on investment and no capital appreciation.&nbsp;<\/strong><\/p>\n\n\n\n<p>With inflation averaging at 4 to 6% each year, your investment on the net affects yields hardly 1 to 2% in this case.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Should_Investors_Do\"><\/span><strong>What Should Investors Do?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Owing Fixed Income Instruments is suggested. But the same needs to be done due diligently. <strong>Invest in these assets not more than 15 to 20% of your portfolio or as per your financial condition &amp; risk-averse behavior.&nbsp;<\/strong><\/p>\n\n\n\n<p>A conservative investor can own safe assets while risky investors can choose to limit owning Fixed income instruments and prefer owning risky assets such as Equity &amp; Crypto.<\/p>\n\n\n\n<p>That\u2019s it about Fixed Income Instruments. Hope this video helps you in your future investment decisions.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fixed_Income_Instruments_During_Recession\"><\/span><strong>Fixed Income Instruments During Recession:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>During an economic slowdown, bonds are preferred over stock investing. <strong>The reason for this is the interest rate. When interest rates are hiked, the value of money, which was dormant until now (during the low-interest rate period), will become active.<\/strong> which means your money has more value than ever before.<\/p>\n\n\n\n<p>Rising interest rates reduce the money supply&#8217;s circulation. As a result, the party offering you the bonds must pay you more than usual. As a result, bond investments will provide a higher interest yield.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Fixed-income instruments, or fixed-income securities, are a type of investment that pays a fixed rate of interest and eventually refunds the primary investment bond&#8217;s money at the bond&#8217;s maturity.&nbsp;<\/strong>Fixed-income securities are financial products that pay investors a predetermined rate of interest in the form of coupon payments. Interest is normally paid semi-annually while the principal invested matures and is returned to the investor.&nbsp;<\/p>\n\n\n\n<p>In contrast to other variable-income instruments, the payments on fixed-income options are known in advance. Fixed-income securities provide investors with a steady stream of periodic interest payments at a fixed rate (known as coupon payments).&nbsp;<\/p>\n\n\n\n<p><strong>Municipal bonds are the most frequently purchased fixed-income products and are available in the form of municipal bonds, government bonds, and corporate bonds. <\/strong>However, not all fixed-income investments are made equal.&nbsp;<\/p>\n\n\n\n<p>Bonds are rated using a variety of characteristics, and these ratings can impact a bond&#8217;s viability. These factors include interest rate risk, credit risk linked to individual bonds, and the company that makes the bonds.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-69f13437 uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-94bdafff\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What are examples of Fixed Incomes?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">People who invest in &#8220;fixed-income&#8221; products like Treasury bonds, municipal bonds, corporate bonds, and certificates of deposit (CDs) can get them from a bank.<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-5e10ab40\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What are Fixed Income and its Types?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">Fixed income securities are a type of debt instrument that pays interest on a consistent, or fixed, basis and repays the principle when the asset matures. Governments, businesses, and other bodies issue these instruments to finance their activities.<\/p><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-31a7120d uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-false uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-3116d0dd\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What is the Safest Fixed Income Investment?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">Bonds are a fantastic alternative if you wish to safeguard your money with a secure investment. Savings bonds, Treasury bills, banking instruments, and US Treasury notes are among the safest bonds. Stable value funds, money market funds, short-term bond funds, and other high-rated bonds are additional safe bonds.<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-779549a6\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What is the Difference Between Fixed Income and Equity?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">There is a distinction between equity and fixed income. Equity income is earned through trading shares and assets on stock markets, which has a significant risk of loss due to price fluctuations. Fixed income is income gained on deposits that earn a fixed rate of interest and are therefore less hazardous.<\/p><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_More_Information_Check_this_Video\"><\/span><strong>For More Information, Check this Video:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"What are Fixed Income Investments? What are the Risks Involved in Investing in #Fixed #investments?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/WegDZlur8CQ?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-4 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/upstox.com\/open-account\/?f=FN1853\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Upstox Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><strong><strong>Disclaimer: <\/strong><\/strong>All the information on this website is published in good faith and for general information purposes only.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"also-read\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/coffee-can-investing\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Coffee Can Investing? Top 15 Companies to Own:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/best-stock-screeners-indian-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 Best Stock Screeners For Indian Investors!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/sukanya-samriddhi-accounts-yojana\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sukanya Samriddhi Yojana Features, Benefits &amp; Eligibility Criteria Explained:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/10-habits-to-overcome-poverty-become-rich\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 Simple Habits to Overcome Poverty and Become Rich!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/mutual-fund-investing\/\" target=\"_blank\" rel=\"noreferrer noopener\">Everything you need to know about Mutual Fund Investing:<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are Fixed Income Investments? Fixed-income investments are those that pay investors a fixed rate of interest or dividends until the instrument matures. Since the Fixed Income Instruments do not provide Capital appreciation. 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