What are fixed-income investments?
Fixed-income investments pay interest in fixed amounts, at specified times.
Fixed-income investments play a role in almost any diversified portfolio because they pay a fixed amount according to a set schedule. We offer a range of fixed-income products including municipal bonds, corporate bonds, treasury bonds, agency bonds and certificates of deposits.
How fixed-income investments work
Fixed-income investments such as bonds, are securities where you lend money in exchange for regular interest payments and the return of your principal investment at maturity. Because fixed-income investments have regular interest payments, they aren't subject to the same volatility as investments in stocks, ETFs, or mutual funds. Fixed-income investments are seen as safe and stable when compared to most other investment types.
As an example, the U.S. government may offer a Treasury note with a 4.5% coupon with a 10-year maturity. During this 10-year period, you would receive regular payments based on the coupon and the face value of the bond. If you invested $10,000 in a 10-year note with a 4.5% coupon, you would receive $450 annually. At maturity you would be repaid the original $10,000 investment in addition to the interest payments you received over the life of the bond, $4,500 total.
Fixed-income investments examples
There are various types of fixed-income investments available, each offering its own set of benefits.
Municipal bonds
Explore municipal bonds offered by states, cities, counties and towns to fund public projects in which Edward Jones serves as a competitive co-managing underwriter.
Corporate bonds
A corporate bond usually has a fixed interest rate, so you'll receive set payments typically twice a year.
Certificates of deposit
Certificates of deposit (CDs) provide a predictable income, generally with FDIC insurance to with protect your principal. They can also be used to build a "ladder" strategy similar to bonds. We offer competitive interest rates on a wide selection of CDs with varying maturity dates and interest payment options.
U.S. Treasuries
A U.S. Treasury bond is essentially a loan that you lend to the federal government. There are several types of U.S. government treasuries which include bills, notes, TIPS, STRIPS and bonds. Compare each option and today's rates to find the best fit for your investing goals.
Did you know that when you buy a U.S. Treasury bond, you are basically extending the U.S. government a loan? Familiarize yourself with the three main types of U.S. government treasuries: bills, notes and bonds.
Agency bonds
An agency bond is like making a loan to Fannie Mae, Freddie Mac, Federal Home Loan Bank or the Tennessee Valley Authority. These bonds are not backed by the U.S. government. They typically offer relatively high liquidity, some tax advantages, and the potential to earn a higher yield than U.S. Treasuries.
Fixed-income investment advantages
Aside from predictable returns, fixed-income investments have other advantages, including:
- Fixed-income investments are an excellent way to diversify your portfolio to mitigate risk.
- Many types of fixed-income investments are liquid, so they can easily be bought or sold.
- Fixed-income investments provide regular returns during recessions or economic downturns.
Get fixed-income investment prospectuses and pricing information
Once you're ready, we can help you get started with fixed-income investing. Access prospectuses and pricing supplements for current and recent bond and equity offerings from Edward Jones.
Important information:
Certificates of deposit (CDs) are federally insured up to $250,000 (principal and interest accrued but not yet paid) per issuing institution. Please visit fdic.gov or contact your financial advisor for additional information. CD values are subject to interest rate risk such that when interest rates rise, the prices of CDs can decrease. If CDs are sold prior to maturity, the investor can lose principal value. FDIC insurance does not cover losses in market value. Please see the Certificate of Deposit Disclosure Statement (PDF) for additional information.