What is Considered Fixed Income?

Shawn Plummer

CEO, The Annuity Expert

Definition Of Fixed Income

Fixed income refers to investment securities that pay investors fixed interest or dividend payments until their maturity date. At maturity, investors are repaid the principal amount they had invested.

Fixed Income

Examples Of Fixed Income

  1. Bonds: Government or corporate-issued securities paying regular interest.
  2. Treasury Securities: U.S. government bonds with fixed interest rates.
  3. Certificates of Deposit (CDs): Time-specific deposits in banks offering fixed interest.
  4. Corporate Bonds: Debt securities issued by corporations with fixed interest rates.
  5. Municipal Bonds: Bonds issued by states or local governments, often tax-exempt.

Retirement Income Investments

Importance

Investing for retirement focuses on generating a stable income to support living expenses in retirement. It’s crucial to balance risk and return.

Strategies

  1. Diversification: Spread investments across various assets to reduce risk.
  2. Dividend Stocks: Stocks of companies that pay regular dividends.
  3. Bond Ladders: Investing in bonds with different maturity dates to ensure regular income.
  4. Real Estate Income: Earning through rental properties or real estate investment trusts (REITs).
Retirement Income Investments

Annuities with Guaranteed Lifetime Withdrawal Benefits

Overview

These annuities provide a guaranteed income stream for life, regardless of market conditions.

Key Features

  1. Guaranteed Income: Ensures a steady income regardless of investment performance.
  2. Withdrawal Benefits: Option to withdraw a certain percentage annually.
  3. Flexibility: Adjust the income stream based on individual needs.

Considerations

  1. Fees: Can be higher than other investment products.
  2. Inflation Risk: Fixed withdrawals may lose purchasing power over time.
  3. Complexity: Contracts can be complex and require careful consideration.
Annuities With Guaranteed Lifetime Withdrawal Benefits

Comparison of Fixed Income Investments

Investment TypeRisk LevelReturn PotentialLiquiditySuitability for Retirement
BondsLow to MediumModerateVariesHigh
Treasury SecuritiesLowLowHighHigh
CDsLowLowLowModerate
Corporate BondsMediumModerateVariesHigh
Municipal BondsLow to MediumModerateVariesHigh
Dividend StocksMedium to HighHighHighModerate
Bond LaddersLow to MediumModerateLowHigh
Real Estate IncomeMedium to HighHighLowModerate
AnnuitiesLowLow to ModerateLowHigh

Conclusion

Understanding fixed income investments is crucial for a secure retirement. Bonds, CDs, and annuities are common choices. Diversifying across these options can balance risk and return, ensuring a stable income in retirement. Remember to consider fees, liquidity, and inflation risk when choosing investments. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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