Types of Fixed Income Products

Those who are on a fixed income will want to know about all of the great investment opportunities available. There can be quite a few investments out there that pose a major risk, especially if you invest a lot of money, but there are others which are safer to put your money into if you have a fixed income. With these fixed income products you will be able to see the principal amount you put in mature over time as interest builds up and at the end of maturity period you will have made a tidy profit. It’s extremely important to carefully look into all of your options so you will be able to make a good decision as to which type of investment is best for you, because there will be many different products to choose from before you can make a final decision. Before you choose one, make sure to consider how long it will take for your investment to mature and what the chances are of seeing a significant return on the initial amount you put down in the first place.

Bonds are one of the most common types of fixed income investments which people make, simply because they are so secure. They are issued by the federal government as well as corporations. A certain amount of interest is paid off on the money which is invested until the bonds reach full maturity which is when you will receive a profit from it. If you find that you are interested in these, you will certainly want to look into all of the different types, including government, corporate, mortgage, foreign, and municipal bonds. Municipal bonds are issued exclusively by the government which makes them extremely secure. With these you are essentially giving the government money to do things like expand upon highways, repave roads, and fix various things which are in bad need of repair. You will receive a pre-determined amount of interest on the principal and you will get paid annually or semi-annually. These are definitely some of the safest bonds available because you are getting paid by local governments.

There are also bond funds to consider which can also be profitable and for the most part are very safe. These are basically mutual funds which invest in bonds. You will find that most of the time these specialize in certain areas of the bond market, such as mortgage, municipal, corporate, foreign markets, and many more. It is important to know about the market you are going into so you will be able to choose one that is the least volatile. Although these bonds are considered to be a fairly safe way to go when investing, there are some markets which can be more profitable than others. You can also choose funds which are either short-term or long-term depending on how quickly you want to see a return on the money you put down. There are also open-end and closed-end funds which you will be able to select from as well, making it extremely important to know as much about them as possible before continuing.

You will also have the option of money market funds which can also be highly profitable and offer you a way to make quite a bit of money without having to risk a lot. These are basically mutual funds which invest in short-term corporate or government municipal obligations. These money market funds have a constant share price that remains stable because of the fact that they have such a short duration, making them ideal for those who do not want a lot of fluctuation with the product they invest in. Those who have been looking for an alternative to money market accounts with banks or short-term CDs will definitely want to consider this as a viable option.

CDs are also another option for those who want to invest a lump sum into an account and collect interest on it over time. You will want to know that with a CD you cannot simple take your money out whenever you want; there is a maturity period which must be reached before you can withdrawal the funds you put in. With some CDs you can accumulate quite a bit of money because of the interest rate, but it is still important to review your options in full before deciding on anything to invest your money on. Anyone who is on a fixed income will want to choose a safe yet profitable investment option for themselves.