What Are Some Good Fixed Income Investments

What are some examples of fixed income investments?

This is an excellent question.

The category of fixed income Investment generally includes all types of Bonds,Preference shares and other instruments, the one fixed rate of return pay and probably up to a specific due date Your capital repay. The range of fixed income investments is wide.

For the fixed income component of a personal investment portfolio, I would go into high quality short term government bonds or invest in index funds and ETFs , which consist of such. Consider holding some too to protect yourself from inflation - for example, Treasury Inflation-Linked Securities (TIPS) in the US or Real Return Bonds (RRBs) in Canada.

Corporate bonds, junk bonds, long-term bonds, strip bonds, convertibles or debentures, and preferred stocks should be avoided by investors who do not understand well the makeup and risks of such investments.

Also structured products such as CDOs (Collateralized Debt Obligations), ABCP (Asset Backed Commercial Paper), MBS (Mortgage Backed Securities) etc. should be avoided. While they were originally marketed as high quality fixed income investments, exploded many structured products during the credit crunch and left investors with a capital loss on their supposedly "safe" investment.

On the subject of CDs / Certificates of Deposit (or GICs / Guaranteed Investment Certificates in Canada), yes, they can be considered fixed income investments as they provide a fixed rate of return and are expected to return principal when due.

However, if the term of a fixed income investment is short (e.g. less than a year) and the quality is high (e.g. government bonds or insured deposits) and it can be liquidated before maturity if desired (with a minor penalty), then is such a fixed income investment could instead be included as part of the component " Cash or cash equivalents " in a portfolio because the risk of significant capital loss due to fluctuations in interest rates is low and the money is available when needed. If a CD can't be sold before the due date, I would personally consider it fixed income, but until the due date Not as cash equivalent.

Additional resources:

JohnFx ♦

Many Thanks. That was a very thorough and informative answer.