Fixed income refers to investment securities that provide regular, predictable returns in the form of interest payments. These investments are typically lower risk and offer steady income over a specified period. Common fixed-income instruments include bonds, fixed deposits, and fixed maturity plans, which are favored by conservative investors seeking stability and capital preservation.
Govt. / Corporate Bonds
Government and corporate bonds are debt securities issued by governments and corporations to raise capital. Investors receive periodic interest payments (coupon payments) and the return of the principal amount at maturity. Government bonds are considered low-risk, while corporate bonds offer higher yields but come with higher risk.
Capital Gain Bonds
Capital gain bonds are specialized bonds designed to provide tax benefits under specific sections of the tax code. These bonds offer interest payments and the opportunity to reinvest capital gains from other investments, potentially deferring or reducing tax liabilities on those gains.
Corporate Fixed Deposits
Corporate fixed deposits are investment products offered by companies to raise funds. Investors deposit money with the company for a fixed term and receive regular interest payments. These deposits typically offer higher interest rates than traditional bank fixed deposits but come with increased risk due to the financial health of the issuing company.
Fixed Maturity Plan (FMP)
Fixed Maturity Plans (FMPs) are closed-end mutual funds with a fixed investment horizon. FMPs invest in debt instruments such as bonds, certificates of deposit, and commercial papers, which mature around the same time as the fund’s maturity date. These plans aim to provide predictable returns and minimize interest rate risk, making them a popular choice for conservative investors.