Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and to repay the principal amount on maturity. Fixed-income securities can be contrasted with equity securities – often referred to as stocks and shares – that create no obligation to pay dividends or any other form of income.
In order for a company to grow its business, it often must raise money – for example, to finance an acquisition; buy equipment or land, or invest in new product development. The terms on which investors will finance the company will depend on the risk profile of the company. The company can give up equity by issuing stock or can promise to pay regular interest and repay the principal on the loan (bonds or bank loans). Fixed-income securities also trade differently than equities.
Enhance your Financial Portfolio
We also offer clients with diverse fixed income products, namely Non-Convertible Debentures (NCDs), Infrastructure and RBI Bonds, Company Deposits, etc. from some of the leading companies, institutions in India. So it’s important to have a clear picture of your goals before you begin selecting individual bonds to invest in. A comprehensive financial plan helps you to Construct lifelong cash flow forecasts, showing all the money you will receive and all the money you will spend in your lifetime. The cashflows use prudent assumptions to protect against inflation and uses realistic returns.
A corporate bond is a bond issued by a corporation in order to raise financing for a variety of reasons such as ongoing operations, M&A, or expanding business.
A certificate of deposit (CD) is a savings certificate with a fixed maturity date and specified fixed interest rate that can be issued in any denomination aside from minimum investment requirements.
A Treasury bond (T-bond) is a marketable, fixed-interest government debt security with a maturity of more than 10 years.