What Are Fixed Interest Investments?: Investing Basics Part 5

This week we are going to look at the risk and return characteristics of fixed interest investments and how these could fit into your overall investment strategy.  When you make an investment in a fixed interest product you are essentially agreeing to lend an institution (say a bank in the case of a term deposit), or a government (in the case of a government bond) or a company, money.  In return they agree to give you regular interest payments and at the end of the period they will give you your initial investment (capital) back.

Common examples of fixed interest investments include:

  • government and semi government bonds,
  • corporate bonds,
  • term deposits,
  • secured and unsecured notes
  • hybrid investments.

Generally speaking, fixed interest investments are considered to be more risky than holding your money in cash but overall are considered quite low on the risk spectrum.  But it should be noted, just because an investment is in the fixed […]