Fixed interest or fixed income is an investment that offers regular set returns over a specified period of time. Unlike when you invest in stocks or most other kinds of investments, the idea of fixed interest is that your rate of return is known, and it doesn\u2019t fluctuate or fall.<\/p>
For this reason, fixed-income assets are often thought of as one of the safest forms of investing because you avoid the price fluctuations you\u2019d typically get when investing in the stock market. Common fixed-income assets include government bonds, company bonds, cash<\/a> and gold<\/a>.<\/p> It\u2019s important to understand that fixed income encompasses many different kinds of products. Even if a fund has labelled itself as being \u201cfixed income\u201d or \u201cfixed interest\u201d, it does not mean that your returns are guaranteed or that your money is safe from market volatility.<\/p> Fixed-income products also differ broadly in terms of risk and performance. While fixed-income products offered by the banks, such as term deposits, have a safety guarantee of up to $100,000, non-bank products broadly categorized as \u201cinvestment funds\u201d have no such guarantee and are regulated entirely differently.<\/p> Examples of products that are commonly classified as fixed-income investments are outlined in this guide below:<\/p> See below to read more about the different benefits and risks of fixed-income investing.<\/p> Peer-to-peer (P2P) lending platforms connect everyday borrowers with investors. Investors replace the banks to become lenders while borrowers sign up to the same platform to receive loans.<\/p> Investors benefit from loaning their funds through a P2P because they can get a higher return than they normally would by investing in a banking product. Plus, most P2P funds offer fixed returns over a period of several months or years, making these a potentially less volatile option than share-market investing or investing in other kinds of managed funds.<\/p> What are the pros?<\/b><\/p> What are the cons?<\/b><\/p> A term deposit is a banking account in which funds are locked down for a specified period of time. In return, the issuing financial institution rewards you with interest on your money at an agreed-upon rate. It\u2019s considered one of the safest options available to investors.<\/p> Because the interest rate is fixed, you know exactly how much your pool of money will have grown by at the end of the term. Once the term ends, you can withdraw the money or reinvest it. The down side is that if you choose to withdraw your funds early, there\u2019s usually a cash penalty applied.<\/p>How to invest in fixed income<\/h3>
Fixed income products<\/h4>
Peer-to-peer lending for investors<\/h3>
Invest in term deposits<\/h3>