Fixed income is an investment that pays a fixed rate of return in the form of interest or dividend income. Examples include bonds, certificates of deposit (CDs), and preferred stock.
What is fixed income?
Fixed-income investments are generally stable options for investors. Their fixed rates of return can provide safety for risk-averse investors, and they usually provide downside protection for an equity-heavy portfolio.
Bonds are the most common type of fixed income, though there are many types of bonds: corporate, treasury, high yield, and municipal. They have varying durations and risk levels, which can serve different roles in a well-diversified portfolio.