Fixed-income and strategy

Understanding Fixed-Income: For Today and the Future

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Fixed income is something many investors don’t understand, according to the 2019 survey, “Fixed Income, Not Fixed Thinking,” by BNY Mellon Investment Management, one of the largest asset managers in the world. The study revealed that the majority of Americans surveyed have a limited understanding of fixed-income investments, regardless of age, income, education level, and other demographics.

The lack of understanding ranged from bonds, different fixed-income solutions, including insurance products, investments inside a mutual fund, comprehending how fixed-income plays into retirement planning, and understanding its risk in comparison to other asset classes. The same study revealed that investors think fixed income is essential solely in the immediate run-up to retirement, or during the decumulation phase when investors start to draw from their retirement nest egg.

However, fixed-income investments can play a part in most investor’s portfolios at any age, and many advisors have incorporated fixed-income into client portfolios to obtain these key objectives:

  • Principal protection
  • Tax-deferred growth
  • Retirement income planning
  • Avoid Social Security income offset
  • Current income
  • Estate/Legacy planning

Before purchasing any fixed-income investment for your portfolio, it is crucial to understand all fees associated with it, if your money is available right away, and the surrender fees, if any. Secondly, following the fixed-income investment’s true return over time is essential to determine tax-consequences and it’s valuation during a down market. All of these factors in the decision to liquidate or hold the investment to maturity, if applicable. Since fixed income securities are debt, it is vital to understand the investment’s rating, and based on financial analysts’ research, if the issuer is likely to pay back their debt to investors at maturity.

Fixed-income securities are generally for conservative investors seeking a diversified portfolio. If you have questions regarding fixed-income or fixed-income investment currently in your portfolio, contact our office.

© 2024 Trajan® Wealth LLC. Nothing in this blog is intended as investment advice, nor is it an offer to buy or sell any security. Please consult your financial advisor for questions about your personal financial situation. All investments involve risk, including the potential for loss. Trajan Wealth clients and employees may have a position in any of the securities mentioned. Portfolio holdings and other data are subject to change at any time and without notice. Additionally, the above links provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Trajan Wealth, L.L.C., of any of the products, services or opinions of the corporation or organization or individual. Trajan Wealth, L.L.C., bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. These materials are for informational and educational purposes and are not designed, nor intended, to apply to any person’s individual circumstances. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Please consult with your legal and/or tax advisor before making any tax-related decisions.

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