Frequently Asked Questions
A fixed income investment is an investment that pays investors a fixed interest or dividend payments until the investment reaches maturity. Once the investment reaches maturity, the investor is repaid with the principal amount that they have invested.
A fixed income investment is open to everyone. All you have to do is find a regulated and trusted fixed-income investment.
A fixed income investment has the following advantages;
- A fixed income investment provides a steady income stream for its investors while waiting for its maturity.
- Fixed income investments are relatively less volatile than other types of investments, which makes it a safer choice.
The following are the main risks of a fixed income investment;
- Fixed income investments are somewhat susceptible to inflation. If the investment takes a long time to mature and inflation is high, it eats into the gains of fixed-income securities.
- Fixed interest rates payouts might also mean that the investors might lose out in the long run. For example, let’s say an investor buys a 5-year bond at a 2.5% fixed interest rate. If the 5-year bond’s interest rate climbs up to 5%, the investor is locked in at 2.5%, which means that he is losing out on potential dividends.
Some of the types of fixed income investment are government bonds, corporate bonds, and sukuk.