In the world of finance, one term that we often hear is "fixed income." But what is fixed income, exactly? Simply put, fixed income refers to investments that provide investors with a predictable, steady income stream. In this article, we will explore fixed income meaning, types of fixed income products, how to invest in fixed income, as well as the advantages and risks associated with this investment type.
Understanding fixed income:
Understanding fixed income requires an understanding of the term "fixed." This means that the returns on these investments are fixed, meaning the interest rates will not change over the investment tenure. These investments generally have low risk and return compared to other investment options, such as equity investments, but offer a steady stream of income.
Types of fixed income:
Types of fixed income products include government and corporate bonds, fixed deposits, and debentures. Government bonds, also known as sovereign bonds, are issued by national governments, and are generally considered being relatively safe investments. Corporate bonds are issued by companies and are typically riskier than government bonds but offer higher returns. Fixed deposits are offered by banks and other financial institutions and are low-risk investments that offer a good rate of return. Debentures are like bonds but are not secured by collateral.
The advantages of fixed income investments:
- First and foremost, fixed income investment options offer a predictable and stable income stream. These investments are designed to provide a fixed rate of return over a specific period, which makes it easy for investors to calculate how much they will earn. This predictability and stability can be especially important for investors looking for a steady income stream, such as retirees.
- Another advantage of investing in fixed income investment options, such as fixed deposits, is that they are generally lower risk compared to other investment options such as equity. This is because these investments offer a fixed rate of return and are often backed by the issuing institution.
- Fixed income investment options also offer flexibility in terms of investment tenures and can be customised to meet the specific needs of investors. For instance, fixed deposits offer different tenures ranging from a few months to a few years, and investors can choose the tenure that best suits their needs.
- Investing in fixed income options is also relatively easy and hassle-free. These investments can be conveniently made online through platforms such as Bajaj Finance that offers FDs with a range of benefits such as high-interest rates flexible tenures, hassle-free renewals, and easy application and disbursal process.
- Fixed income investment options also offer a higher rate of return compared to traditional savings accounts. This is especially true for those investments with a longer tenure. As an example, Bajaj Finance Fixed Deposits offer interest rates of up to 8.60% p.a. to senior citizens with for 44 months.
Investing in fixed income instruments like FD and SDP
When it comes to investing in fixed income, there are several options available. Fixed deposits and Systematic Deposit Plans (SDPs) are popular options for investors.
Fixed deposits allow investors to earn interest on their investments at a fixed rate for a specific period, ranging from a few months to several years. The Bajaj Finance Fixed Deposit has flexible investment tenures from 12 to 60 months. We also give flexible payout options of monthly, quarterly, half-yearly, and yearly to suit customer’s short-term and long-term goals. Bajaj Finance FDs are of two types: Cumulative (interest payout at maturity) and non-cumulative (regular payout). It is also one of the safest investment options in the country with high stability ratings.
SDPs, on the other hand, allows investors to make regular deposits over a specific period and earn a fixed rate of interest. The Bajaj Finance SDP has two types: MMS (Monthly maturity scheme) and SMS (Single maturity scheme).
With the Single Maturity, you can choose to make between 6 and 47 deposits over a flexible tenure of 19 to 60 months. The tenure for individual deposits gradually reduces as the maturity date of each succeeding deposit is adjusted according to your chosen tenure. This is great if you want to build a large corpus.
In the Monthly Maturity Scheme, each deposit you make during the tenure matures at a different date. The tenure you choose applies to each deposit you make. You can choose to make between 6 and 48 deposits throughout a flexible tenure of 12 to 60 months. The monthly income scheme helps you get a regular payout.
In conclusion, fixed income investments offer investors a safe and predictable income stream. These investments are predictable, stable, and offer a lower risk compared to other investments. Fixed income investments are flexible and can be customised to meet the specific needs of investors. Invest in Bajaj Finance Fixed Deposit or Systematic Deposit Plan to get high-interest rates, flexible tenures, and easy investing.