Fixed Interest

Fixed interest investments like government bonds offer investors a regular income for a specified term with the expectation that the principal will be repaid at the end of the term (maturity date).

Fixed interest assets

Fixed interest assets (also called “fixed income”) include corporate bonds, government bonds, semi-government bodies and debentures. They work like a loan from you to the bond or debenture issuer, with a set rate of interest due to be paid to you at set intervals, and often a specific payback date.

Slightly higher risk and returns than cash

Fixed interest investments generally involve lower risk than shares and property, but sit higher on the risk spectrum than cash.

As a consequence, the returns from fixed interest are typically slightly higher than for cash.

Benefits of investing in fixed interest

Fixed interest investments offer benefits such as regular income returns at a set interest rate, over a fixed term. This can provide greater certainty than other sources of income like, say, dividends from shares. You will also be paid your initial investment on maturity; even if interest rates fall, you are locked into a rate of interest until maturity.

A role to play in diversification

While fixed interest investments can be safer, like all investments there are risks. For example, corporate bond investors may lose all or part of their initial investment if the company issuing the security fails. 

Some fixed interest investments require large sums of upfront capital, potentially putting them beyond the reach of individual investors. An alternative can be investing in a managed investment that has fixed interest investments in its underlying assets.

These managed investments offer professional investment management and can provide a good spread of underlying investments, giving you broad exposure across the fixed interest market. 

Next: Shares

Shares offer an opportunity to own a stake in a company, and with this comes the potential to earn dividend income and possible capital gains over the medium to long term.

We offer a range of investment solutions to help you build, manage, or grow your own portfolio.

Cash assets can play a valuable role in your portfolio, offering safer returns and in many cases letting you access your money when you need it.
Diversifying your portfolio across multiple investments can be a valuable strategy to help to lower overall risk and potentially improve long term returns.
Managed funds let individual investors pool their money with other investors to benefit from a diverse range of underlying assets and professional investment expertise.