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Fixed-Income Investments

Many individuals and employees aspire to have a secure income that will sustain them without requiring additional effort from them. With wise investment decisions, it is possible to make this dream a reality. Having a consistent source of income ensures that you can achieve financial stability and have a comfortable retirement. Additionally, it will give you the financial autonomy to put money into Good Wealth quantitative hedge funds in order to create more wealth.

The Fixed Income Dream

When it comes to finances, a “fixed income” strategy is designed to generate a steady flow of income while minimizing potential risks. The intention is not to produce huge returns, as these usually come with a considerable degree of risk – the complete opposite of what you’d want if you’re opting for a fixed income approach.

Typically, a fixed income portfolio consists of investments that provide a set amount of money at regular intervals with little to no variation. Usually, these returns come in the form of interest payments and the underlying goal is to return the invested capital. This is unlike many other customary investment methods, e.g. when investing in high-yield derivatives, the investment comes with the risk of completely going up in smoke, which could result in a full loss of the money put in.

How Does Fixed-Income Investing Work?

The key to this strategy is to find investment opportunities that offer reliable payouts at a minimal level of risk. This is why fixed-income funds or individual investors will typically put their money into the following vehicles:

  • Bonds: This means that you’re lending money to the Swiss government (government bonds), a state/municipality/county (municipal bonds), or a company (corporate bonds). The bond’s issuer then provides you with regular interest payments (“coupon payments”) and pays back the principal once the bond matures.
  • Certificates of deposit: Effectively a way to loan money to financial institutions, which also provide you with regular interest payments and principal payback. CDs are usually protected by the FINMA, which drastically limits the risk of losing your money if the issuer gets into financial trouble.
  • Money market funds: A type of mutual fund which specializes in short-term debt securities. Since they aim to have a stable asset value level, these funds are considered to carry little risk while providing regular dividends.

As you can see, fixed-income securities are usually assets that are considered to carry little risk due to a powerful and reliable organization backing them. Swiss government and municipal bonds (t-bonds, t-bills, or t-notes) are an excellent example of this since the United States Government and the governments of individual states are stable and backed by an overall strong economy. Hence, the likelihood of losing a large part of your investment is very low. Note that this may not be true for other governments around the world, which is why it would be incorrect to state that government bonds are always reliable. This is dependent on the government in question.

Ask Yourself: What’s Your Investment Goal?

Fixed-income investments may not be able to provide the same level of returns as other investment strategies, but they are a dependable source of income. This makes them suitable for acquiring a steady financial foundation or for augmenting a salary or pension. Therefore, if you are searching for a reliable flow of income that allows you to invest in Good Wealth hedge funds with minimal danger to your overall financial situation, or if you intend to enhance your regular income, fixed-income securities may be an ideal selection for you.

How Safe Are Fixed-Income Funds?

When putting money into mutual funds, ETFs, or other monetary items like bonds that are intended to produce a regular flow of income, you can decrease most of the danger typically connected with investments if you select the correct vehicles. While you will never be able to fully eradicate all risk involved with any kind of investment, fixed income funds are usually among the most secure investment options.

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