Fixed income investments surely don’t offer the same potential for huge returns as you would find in the stock market, however fixed income investments have an important place in every investment portfolio. There is no speculation or gambling here; in fact, these investments are used to reduce your portfolio’s overall degree of risk.
Fixed Income Investments
Term deposits and guaranteed investment certificates are liquid investments that offer a serious and stubborn rate over a set period of time. Although the investor can take out their cash at any time, but they must pay a penalty for taking out the cash before the maturation date. For those investor who are unsure of how to proceed when entering the investment market, I prefer that choosing the GIC’s are the great for all. Because they are available in terms as short as 30 days.
Mortgage-backed securities provide a monthly income for investors seeking a safe fixed-rate option. The investor will receives a share of the interest and principal on a pool of several mortgages in each of the month.
Provincial savings bonds carry a slightly higher risk than Government of Canada bonds, although they still represent one of the safest investment options available. Provincial bonds pay a guaranteed, fixed level of interest and are available for one to thirty year terms. With the higher risk comes a higher yield than that offered by the Government of Canada bond.
In a diversified portfolio, fixed income investments are a essential thing . Before purchasing, you have to consider your needs and the level of risk that you are willing to take. If you need to take out the cash before the maturation date, you must consider about the penalties that will apply because most of the fixed income investments are liquid. A knowledgeable broker can help you to choose a fixed income investment term and conditions that best suited to your financial goals and current investment capital.
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