| Fixed Income Investing |
Fixed-income securities
A bond represents a loan that you, as an investor, make to a government entity, municipality, corporation, or other institution. A bond is a type of fixed income investment because it periodically pays a fixed amount of interest to investors. Bonds repay principal on a specific date called the maturity date. They are typically used to:
- Generate current income to help meet your financial needs
- Provide a means of diversification (from stocks) that may help reduce the overall risk of your portfolio
The Fundamentals
An introduction to fixed-income investing.
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Government Securities
Direct obligations of the U.S. Government.
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Securities Ratings
Provides independent objective assessments of the credit-worthiness of companies and countries. |
Risk
There is no such thing as a risk-free investment. Here are some common types of risk to consider when choosing fixed-income securities.
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Municipal Bonds
The interest that investors receive from municipal bonds is exempt from certain income taxes. |
Corporate Bonds
Issued by corporations to raise money for capital expenditures, such as building plants and expanding facilities.
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High Yield Corporate Bonds
Commonly called "junk" bonds because they are rated below investment grade. |
Mortgage- and Asset-Backed Securities
Most mortgage-backed securities are driven by the principal and interest payments on home mortgages. Asset-backed securities are typically collateralized by auto loans, equipment leases, home equity loans, or other types of loans. |
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