Shoeaholic No More



December 2015



Tips for Fixed Income Assets

Written by , Posted in Money & Finances

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business-861325_640Fixed income is a way in which you can own assets in the form of bonds. These can be state, municipal or corporate bonds. They are called fixed income assets for the reason that they give returns as payments that are made to your bank account on a regular basis and are at a fixed rate regardless of the state of the current economy and the market.

Fixed income investments are a way of making sure that you get back payments with a whole load of benefits. These include assets that concentrate on saving the capital you invested in them at the start, as well as being a way of creating new income opportunities for yourself. In addition to this, you get the opportunity to make your portfolio far more diverse.

There are many ways you can invest in a fixed income asset, and the number of options that people have to choose from are constantly increasing as well. In the last 20 years alone, there has been a meteoric rise in the types of assets available to investors. Some of the most common forms are probably ones you have already invested in.

Back in the day, investors didn’t have much of a choice when it came to the fixed income assets they could invest in. Most of the time, the only choice available was to get a government bond. This was quite a turnoff for people who wanted to diversify their investment portfolio with a variety of different assets and plans.

Government bonds

These are also known as treasury bonds. The government of your country will probably send out these fixed income bonds in order to pay for the investments the government makes and to pay off the national debt one step at a time. It has a low risk factor, which is dependent on the length of the fixed income contract. This is typically 1 year long, which is a pretty low risk.

Agency bonds

These are issued by semi-government agencies and departments in order to back their mandates. This makes sure that people have the ability to gain enough credit at a low rate. However, this has a higher risk than a government bond. The risk factor for these bonds is in the mid-ranges.

Corporate bonds

Also known as credit, these are issued by large companies. This is done in order to expand their reach across the entire country. They also use this as a way to get enough money to upgrade the company and to fund the activities that they undertake. It usually has a higher risk factor than government and agency bonds and can be classified as a mid-to-high risk investment for you.

Asset bonds

These are issued by banks and finance companies. Mortgages and other credit accounts are consolidated and offered as a security option to investors. This is done in order to collect enough money to be able to offer higher mortgages at lower rates. This has about the same risk factor as a corporate bond, but the yield is higher as well.

Overall, each of these options has their own risks, however they are all less risky than the stock market. They aren’t as unstable, and you won’t have to make predictions that could backfire with severe repercussions.

Photo courtesy of: edar

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Taylor Madsen

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