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Fixed income instruments are loans made by the lender (investor) to the borrower (issuer) in exchange for regular income payments and the return of capital at maturity. While fixed income instruments vary, they generally have a fixed term and a schedule of interest payments which differs to equities where dividends are discretionary.
Fixed income can play a valuable role in investment portfolios, with a wide range of yields to suit your risk profile and investment objectives, capital stability and the repayment of principal at maturity (assuming the issuer does not default or become insolvent) being among the key benefits.
There are two types of fixed income securities:
The majority of investment returns for fixed income come from regular (coupon) payments.
Listed fixed income are exchange traded which can give you a convenient way to buy or sell investments.
Fixed income investments are typically less volatile and rank high on a company's capital structure.
For unlisted fixed income investments, there may not be a buyer when you wish to sell.
If interest rates rise, the price of bonds in the market fall.
In the event of an issuer default, your coupon payment and return of principal may be impacted.
The information on this website is general in nature and based on information available at the time of publishing, information which we believe is correct and any forecasts, conclusions or opinions are reasonably held or made as at the time of publishing. The information does not constitute financial product or investment advice. Past performance is not necessarily indicative of future results. No warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither National Australia Bank Limited ABN 12 004 044 937, Australian Credit Licence and AFSL No. 230686 or any of its related entities accept liability to any person for loss or damage arising from the use of this information.