Fixed income portfolios are a popular portfolio type for people who are seeking income instead of growth.
Any focus on fixed income is usually going to comprise mostly of assets such as bonds, cash, and money market funds.
Understanding Fixed Income
A key fixed income asset class is bonds. There are many different bond asset classes. Here are the key ones:
Bond Asset Classes
Government bonds: Countries, states, provinces, states, municipalities, cities. Basically any type of government structure.
Corporate bonds: Companies.
High Yield bonds: Either government or corporate, these bonds are lower quality bonds that demand a higher interest rate.
Aside from bonds, are cash and money market funds.
Cash
Although it sounds like cash is just simply cash, it actually also includes CDs. CDs are certificates of deposit that can be bought at a bank.
Who Likes Fixed Income?
A person who finds fixed income portfolios attractive wants to consider that fixed income portfolios do not necessarily grow beyond the rate of inflation.
They oftentimes don’t even keep up with inflation.
Since many fixed income portfolio may not be able to keep up with inflation, the portfolio value erodes through time.
That makes this portfolio type unsuitable for people who cannot afford to have a portfolio not grow.
Next Step
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