Fixed-Income Securities


The term fixed-income security refers to investments that provide their owners with periodic payments in addition to the preservation of capital if held to maturity.  Fixed-income securities provide their holders with a return that is known, in addition to providing a consistent payment schedule.


Fixed-income securities are typically valued by investors looking for a reliable source of income as well as the eventual return of their original investment (principal).  The security these investments offer their holders usually results in a lower rate of return too.  Examples of fixed-income securities include:

  • Bonds:  issued by corporations (equipment trust certificates, debentures), municipalities (general obligation and revenue bonds), as well as the U.S. Treasury (savings bonds, treasury notes and bonds); payments are made on a fixed schedule as is the return of principal.
  • Certificates of Deposit: a savings account that features a maturity date and entitles the holder to receive periodic interest payments.
  • Money Market Accounts: a low-risk investment issued by financial institutions, usually consisting of certificates of deposit, commercial paper, and government securities.
  • Annuities: available through a number of financial institutions, annuities guarantee a stream of income for life or a pre-established period of time.
  • Asset-Backed Securities: issued by both financial institutions as well as government agencies, can include mortgages, credit card debt, as well as automobile loans.

Related Terms

variable income securities, primary securities market, secondary securities markettax-anticipation notes, revenue-anticipation notes