In plain words: A type of investment in which real return rates or periodic income is received at regular intervals at reasonably predictable levels.
Fixed income covers investments designed to pay a known, relatively steady stream of income over time. The classic example is bonds — loans to governments or companies that pay interest on a schedule. For a closer look, see fixed income.
How does fixed income work?
You lend capital and, in return, receive periodic payments plus the return of principal at the end of the term. Because the terms are set in advance, the income is more predictable than market-driven gains, though it is not entirely risk-free.
Where does fixed income fit in a portfolio?
It often plays a stabilising role, tending to swing less than variable income. Many balanced portfolios pair it with growth assets so that the steadier component can cushion sharper moves elsewhere. The trade-off is usually lower expected long-term return.
Key takeaways
- Fixed income pays a predictable, scheduled stream of income, typically via bonds.
- Returns are set in advance, making them steadier but generally lower than growth assets.
- It commonly acts as a stabiliser within a diversified portfolio.