When many people think about investing, the first thing that comes to mind is the stock market. And that’s not surprising, as the rise and fall of stock prices is constantly in the news. But if you’re going to achieve your financial goals, you may well need to look beyond stocks and include fixed-income investments in your portfolio.
Fixed-income investments offer three important benefits:
• Income – When you invest in fixed-income vehicles, such as bonds, Treasury securities and certificates of deposit (CDs), you receive regular income in the form of interest payments. And you continue to receive this income until your investment matures or you sell it, no matter what’s happening in the financial markets. Of course, the income you can receive from fixed-income investments will always depend on the interest rates at which these investments were issued. But if you own a mix of long-term and short-term fixed-income investments, you can gain some protection against fluctuating rates. When market rates are low, you can get greater income from your longer-term bonds, which typically — although not always — pay higher rates. And when market rates rise, you can benefit by reinvesting the proceeds from your shorter-term bonds.
