What are fixed-income investments?

Fixed-income investments pay interest in fixed amounts, at specified times.

Fixed-income investments play a role in almost any diversified portfolio mix because they pay a fixed amount according to a set schedule. We offer a range of fixed-income investment products including municipal bonds, corporate bonds, treasury bonds and agency bonds, along with certificates of deposit.

How fixed-income investments work

Fixed-income investments are types of fixed investments, such as bonds, where you lend money in exchange for regular interest payments and the return of your principal investment after maturity. Because fixed-income investments come with regular interest payments, they aren't subject to the same volatility as investments like stocks, ETFs, or mutual funds. Fixed-income investments are seen as safe and stable when compared to most other investment types.

As an example, the government may offer a Treasury note with a 4.5% rate for $10,000 with a 10-year maturity rate. During this 10-year period, you would receive regular payments based on the rate and the face value of the bond. So, at 4.5%, a $10,000 10-year note would yield $450 annually. After 10 years, you would then be repaid the original $10,000 investment while earning a total of $4,500 in interest over those 10 years.

Fixed-income investments examples

There are various types of fixed-income investments available, with each offering its own set of benefits. These are some of the most popular forms of fixed-income investments.

Municipal bonds

Municipal bonds offer tax-exempt income and high credit quality, making them an option for income-oriented investors looking to reduce federal and, possibly, state income tax bills.

There are also considered to be among the safest investments.

Municipal bonds offer tax-exempt income and high credit quality, making them an option for income-oriented investors looking to reduce federal and, possibly, state income tax bills.

There are also considered to be among the safest investments.

Corporate bonds

A corporate bond usually has a fixed interest rate, so you'll receive set payments typically twice a year. Use these payments for portfolio protection or as an income stream.

Certificates of deposit

Certificates of deposit (CDs) can be a good choice when you want steady, predictable income with protection for your principal. They can also be used to be build a "ladder" strategy similar to bonds. We offer competitive interest rates on a wide selection of CDs with varying maturity dates and interest payment options.

U.S. Treasuries

A U.S. Treasury bond is essentially a loan that you lend to the federal government. There are three main types of U.S. government treasures: bills, notes and bonds. Compare each option and today's rates to find the best fit for your investing goals.

Did you know that when you buy a U.S. Treasury bond, you are basically extending the U.S. government a loan? Familiarize yourself with the three main types of U.S. government treasuries: bills, notes and bonds.

Agency bonds

An agency bond is like making a loan to Fannie Mae, Freddie Mac or the Tennessee Valley Authority, although not all of these bonds are backed by the U.S. government. They typically offer relatively high liquidity, some tax advantages, and the potential to earn a higher yield than U.S. Treasuries offer.

Fixed-income investment advantages

Aside from offering fixed returns, fixed-income investments have plenty of advantages over other types of investments. Here are other advantages to fixed-income investments:

These investments provide stability and predictability during volatile markets.
Fixed-income investments are an excellent way to diversify your portfolio to mitigate risk.
Many types of fixed-income investments are liquid, so they can easily be bought or sold.
Fixed-income investments retain their value and continue providing regular returns during recessions or economic downturns.