Wealth · Fixed Income
Fixed income: stability & regular returns for your portfolio
A cornerstone of diversified portfolios. Fixed-income securities are debt instruments that pay a fixed stream of income over a set period and typically return your principal at maturity — prized for stability, income and capital preservation.
The basics
What is fixed income?
Fixed income means investments that provide a predictable stream of payments. You’re essentially lending money to a borrower — a government, corporation or municipality — in exchange for regular interest and the repayment of your principal at a future date.
Bonds
The most common form — issued by governments (G-Secs, treasury bills) or corporations.
Debentures
Similar to bonds, and often unsecured.
Certificates of Deposit
Time deposits offered by banks.
Money-market instruments
Short-term debt like commercial papers and treasury bills.
Fixed Deposits (FDs)
A fixed interest rate from a bank for a set period.
The case
Why invest in fixed income?
Regular income stream
Predictable, consistent interest payments — a valuable income source, especially for retirees.
Capital preservation
Generally less volatile than equities, aiming to preserve your original investment if held to maturity.
Diversification
Bonds often behave differently from stocks, helping reduce overall portfolio risk in downturns.
Lower volatility
Typically smaller price fluctuations than equities — a more stable portfolio component.
Portfolio stability
Acts as ballast, cushioning against sharp declines in equity markets.
Predictability
Fixed payments and maturity dates give a clear outlook on future returns.
Vocabulary
Key concepts in fixed income
Principal (face / par value)
The amount the borrower promises to repay at maturity.
Coupon rate
The fixed annual interest paid on the bond’s face value.
Maturity date
The date the principal is repaid to the investor.
Yield to Maturity (YTM)
The total return expected if the bond is held until it matures.
Credit rating
An assessment of the borrower’s ability to repay its debt.
Duration
A measure of a bond’s price sensitivity to interest-rate changes.
Bond price
The market price at which a bond trades.
Government bonds (G-Secs)
Issued by central or state governments — generally low-risk.
Corporate bonds
Issued by companies to raise capital, carrying varying credit risk.
Know the risks
Risks associated with fixed income
Interest-rate risk
If market rates rise, the value of existing bonds tends to fall.
Credit / default risk
The borrower may fail to repay principal or interest.
Inflation risk
Inflation can erode the purchasing power of fixed payments.
Liquidity risk
Some bonds can be hard to sell quickly without a price impact.
Reinvestment risk
Future interest payments may have to be reinvested at lower rates.
Your roadmap
How to get started in India
Define goals & risk tolerance
Clarify what you’re investing for and how much fluctuation you can accept.
Research fixed-income options
Compare bonds, FDs, G-Secs and debt funds against your needs.
Open a Demat & Trading account
With a SEBI-registered broker, to hold and trade securities.
Choose direct vs indirect
Direct — buying individual bonds.Indirect — investing through debt mutual funds.
Assess credit ratings
Check issuer ratings to gauge default risk before committing.
Start investing
Deploy capital in line with your plan.
Monitor & review
Track holdings and rebalance as rates and goals change.
Get started
Open your Demat & Trading account
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