The Investor's Guidebook to Fixed Income Investments by Stuart R. Veale: 9780735205314 | PenguinRandomHouse.com: Books (2024)

FAQs

What is a fixed-income investor? ›

Fixed-income investing is a lower-risk investment strategy that focuses on generating consistent payments from investments such as bonds, money-market funds and certificates of deposit, or CDs.

Most experts consider Treasuries to be the safest fixed-income investments because they are backed by the government.

This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Investments that can be appropriate include bank CDs or short-term bond funds. If your investing timeline is longer, and you're willing to take more risk in order to potentially earn higher yields, you might consider longer-term Treasury bonds or investment-grade corporate or municipal bonds.

First, there is uncertainty with the cash flow of the bond because an expected five-year cash flow might end early. Second, if the bond is called when the interest rate is low, then the investor is subject to reinvestment risk.

In current market circ*mstances, with higher bond yields, fixed income investments have become an attractive asset class again from a risk-return perspective. Apart from the attractive yield, bonds also offer resilience for adverse market developments in risk assets like equities.

Investors who hold fixed income generate a return even when the stock market is down. Fixed-income investing is also a way to earn passive income: When investors own a fixed-income instrument, such as a bond or CD, they collect the income without having to manage any other considerations regarding the holding.

Treasury bonds and bills, municipal bonds, corporate bonds, and certificates of deposit (CDs) are all examples of fixed-income products.

Fixed-income securities provide steady interest income to investors, reduce risk in an investment portfolio and protect against volatility or fluctuations in the market.

What is the difference between equity and fixed-income investors? ›

Equity securities are financial assets that represent shares of a corporation. Fixed income securities are debt instruments that provide returns in the form of periodic, or fixed, interest payments to the investor.