A Guide to Fixed Income

A Guide to Fixed Income

The types of investment security under which the investors get paid fixed interest or dividend payments until their maturity date are broadly called Fixed Income. The investors get paid the amount they have invested known as the principal amount at the maturity date. The most common types of Fixed Income products are Government and Corporate Bonds.

The major difference between Fixed Income securities and equities or variable-income securities is that the payment for Fixed Income securities is known in advance and will remain fixed throughout the period till maturity whereas equities might not pay any cashflows to the investors or when payments could change based on factors such as short-term interest rates. 

What are the types of Fixed Income products?

As we have established before, the most commonly known Fixed Income security is a Government Bond or Corporate Bond. Government securities are mostly those that are issued by the U.S. government and are called Treasury Securities. Furthermore, these Fixed-Income securities are not limited to U.S Government only rather they are also provided by non-U.S. Governments and corporations.

Below mentioned are some of the types of Fixed-Income Products

  • Treasury bills, also known as T-bills
  • Treasury notes, also known as T-notes
  • Treasury Bonds, also known as T-bonds
  • Treasury Inflation-Protected Securities (TIPS)
  • A Municipal Bond
  • Corporate Bonds
  • Junk Bonds
  • Certificate of Deposit (CD)

BY: Admin Tax4wealth

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