Fixed Income Investments Basics
If you've considered investing in certificates of deposit (CDs), money market funds, or municipal bond funds, you've thought about putting your money in a fixed income investment. An overview of the benefits included with this type of investment is included within our Advantages of Fixed Income Investments page. To help expand your current understanding of fixed income investments even further, we've also addressed some of the more general concerns below.
Who Should Consider Using Fixed Income Investments?
First Time Investors
If you've never made a formal investment beyond a standard checking or savings account, a fixed income investment may be right for you. Several different types can last only a few months before maturing. A fixed income investment is a good way to get a taste for the investment process and the value of returns.
Conservative Investors
If you're simply interested in investing a small amount of capital, or if you want to store a large amount somewhere and be safe from fluctuating markets, you may want to consider a fixed income investment.
Investors Nearing Retirement
As with any investment, interest in fixed income investments require time to accrue. If you're nearing your age of retirement, you might see a better return from a short-term fixed income investment than in a longer-term investment.
Anyone Making Short-Term Investments
If you are considering investing your money in hopes of experiencing long-term growth, read through our pages discussing IRAs and other long-term, high-yield investment strategies.
What Should I Look For in a Fixed Income Investment?
Certificates of deposit (CDs), money market funds, and other fixed income investments each have their own specific sets of guidelines. To understand exactly how your money will work as part of these investment strategies, find out the following information before you sign:
- Maturity Date. Ask how long you will need to keep your investment before you can receive your funds penalty-free.
- Interest Rate. Find out the rate of return for your funds and how often the interest will be compounded.
- Access and Penalties. What restrictions will prohibit you from accessing your funds? If you foresee a need to withdraw your funds before the investment's maturity date, ask about any penalties you could experience. Also, find out if you can withdraw funds from an ATM, transfer funds online, or write checks.
- Customer Service. Determining how much service you will need can help narrow your search for the right type of investment. If you want to be able to visit a brick-and-mortar store and talk to a representative, your investment must be local. However, if you simply want to be able to check your balance online, you will have more options.
Once you determine if a fixed income investment is right for you, learn everything you can about your options. Ask questions, and feel confident with your decision before committing to any investment strategy.
