Fixed income investments certainly don't offer the same potential for massive returns as you would find in the stock market, however fixed income investments have an important place in every investment portfolio.
These investments are used to reduce your portfolio's overall degree of risk.The reward may be a guaranteed return of investment paid out at specified intervals, resulting in a steady cash flow. A wide range of bonds, securities, and more are usually issued by the government, or a corporation.
Term deposits and guaranteed investment certificates are liquid
investments that offer a pre-determined rate over a set period of time.
Although the investor can cash out at any time, they will pay a penalty
for cashing out before the maturation date.
Mortgage-backed securities provide a monthly income for investors
seeking a safe fixed-rate option. Each month, the investor receives a
share of the interest and several mortgages.
Provincial savings bonds carry a slightly higher risk, although they still represent one of the safest investment options available. Provincial bonds pay a guaranteed, fixed level of interest and are available for one to thirty year terms.
Fixed income investments are a necessity in a diversified portfolio.Before purchasing, consider your needs and the level of risk you are willing to take. Although most fixed income investments are liquid, you must consider the penalties that will apply if you need to cash out before the maturation date. A knowledgeable broker can help you choose a fixed income investment term and conditions best suited to your financial goals and current investment capital.
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