As name itself states income in a fixed way , fixed income are basically those types of investments/securities that pays individuals or an investor fixed periodic interest payments on our investment until its maturity date. Fixed income is mostly preferred by risk averse investors who wants to earn income steadily
Also in india , some of the fixed income securities are backed by government such as treasury bills , government bonds ,etc which is next to nil in terms of default. It also enables efficient portfolio diversification and thus assist in portfolio risk-mitigation
Types of fixed income securities
- Mutual funds
- Fixed deposit
- Recurring deposit
- National savings certificate
- Government bonds
- Corporate bonds
- Post-Office Time Deposit
- Public Provident Fund
- Treasury bills
- Pradhan Mantri Vaya Vandana Yojana (PMVVY), etc.
Why invest in fixed income securities ???
If you are an active investor , then fixed income will help u in diversifying your risk as well as your returns. Risk will be reduced overall. If your goal is less risk and steady income than fixed income securities is the better option compared to other securities . also, in india some of the fixed income securities has tax saving options too.
fixed income securities are the ones that invest in debts, bonds and other related securities so it is basically less risk than equity market and perfect instrument for risk averse investor. Also fixed income has a benefit of liquidity prioritization. If a company gets bankrupt/dissolved then at the time of repayment , the ones holding bonds will get a first priority over secondary market.
The invested capital in a fixed income security is at lower risk when compared to investment in equities. As some of these instruments, such as treasury bills or government bonds, are backed by the government, the chances of defaulting on the payment of interest and principal is almost zero. Also, if the instrument is highly rated by the credit rating agencies such as CRISIL, the possibility of an investor incurring a loss is minuscule. This makes fixed income financial instruments, one of the safest investment avenues available in the market.
How to invest in fixed income securities??
and for FDs and RDs , please contact your bank