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When to Use Fixed Income Investments? Ask C.L. King

May 23, 2017

Whether one is living in difficult or robust economic times, it is always important to have an investment strategy that includes relatively safe investments. One form of investment is known as Fixed Income Investments.

 

Fixed income investment refers to any type of investment that generates an average return. Investors loan their money to a government body, corporation, or financial institution and receive interest on a regular basis. Although the rate of return may not be high, there is comfort knowing the risk is minimal. If a person is seeking to invest their money where there is not a high risk, fixed income investments are usually the solution.

 

The term fixed-income investment include such investments as bank notes, mutual funds, mortgage backed securities, retirement investments such as GICs, T-Bills, as well as government and corporate bonds, and other forms of securities. While the principal and return are not fail-safe, these fixed-income funds offer the chance for a higher return. They are popular for those planning on retiring in the near future.

 

GICs are a popular choice as a fixed income investment. The interest and principal are insured to a certain degree so your money is for the most part protected. Fixed-income mutual funds are a good choice for wary investors as they provide the opportunity to predict income over a set period of time. This is handy for budgeting purposes, so people can plan for retirement.

Many prudent investors acquire bonds as a fixed income investment. They generally pay out twice a year or on a monthly basis. Bonds are a tax-free investment income. Such bonds can be federal, state, or local municipality bonds. 

 

Certificates of Deposit allow people to earn interest on their investment without any real risk of loss. It is much like putting money in an insured bank investment for a fixed period of time. It will earn a preset interest rate for a fixed time period. After the time expires, the certificate matures and the investor can cash in the certificate. They will receive their initial investment plus any interest earned. 

Savings Bonds pay a fixed interest rate that is delayed until the bond is redeemed or for 30 years. The rate is based on the interest rate at the time of purchase. The interest paid is adjusted for inflation. 

 

If you are about to retire and are in need of an investment with low risk, fixed income solutions can be the right choice. Investment portfolios will benefit by having a safe and secure stock. By combining investments that are affected differently by economic events, investment risk is reduced. These investments are often chosen during periods of market instability. Fixed investments can fluctuate with market conditions. If you have to sell them prior to maturity, you will usually receive a penalty fee.

Fixed Income Investments are a sound choice for cautious investors and those seeking a safe investment for retirement. Most fixed-income investments also provide a foreseeable flow of income. This can be an advantage for those on a pension or social security.

 

C.L. King & Associates is a full-service investment bank and self-clearing broker-dealer founded in 1972. C.L. King Fixed Income Group is comprised of 26 sales and trading professionals. Our veteran staff specializes in diverse markets within the fixed income universe, each bringing an abundance of knowledge and experience in their respective product areas.


Our main product lines include U.S. Treasuries, U.S. Agency debentures, high yield, convertible, and investment grade corporate bonds, mortgage-backed securities, municipal bonds, certificates of deposit and preferred stocks. While the bulk of our trading volume transpires in the secondary markets, we are also an active underwriter of corporate bonds and in the competitive municipal market as well as an approved underwriter of FNMA debt. Our offerings can be viewed on a Bloomberg Offering menu accessed by keying CLKA.

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