London Office (Head Office)

70 Pall Mall, St James's

London SW1Y 5ES

United Kingdom

Melbourne Office

Level 27, 35 Collins Street

Melbourne, Victoria

Australia 3000

Sydney Office

Level 36, 1 Macquarie Place

Sydney, New South Wales

Australia 2000

AU: + 61 (3) 9001 0243

UK: + 44 (0) 207 965 4701

enquiries@mayfair101.com

Send us a message
Subscribe to our newsletter
Keep up with the latest updates
  • LinkedIn - White Circle
  • YouTube - White Circle

Disclaimer

Online Investments Pty Ltd t/a Mayfair 101 (ABN 981 34 785 890) provides investment and corporate advisory services including funds management, asset management, capital raising, corporate advisory, M&A (merger & acquisition) advisory, and direct investment either directly or via its wholly owned subsidiaries.

 

Mayfair 101 is a Corporate Authorised Representative (CAR # 001274568) of Quattro Capital Group Pty Ltd (AFSL # 334653). Mayfair 101's authority under its Corporate Authorised Representative Agreement with Quattro Capital Group Pty Ltd is limited to the provision of financial services to Wholesale clients only pursuant to the Corporations Act (Cth), including advice relating to deposit products, foreign exchange contracts, derivatives, interests in management investment schemes, and securities.  Mayfair 101 and its wholly owned subsidiaries are not deposit-taking institutions in Australia or the United Kingdom and are not authorised to conduct retail banking activities as specified in the Banking Act 1959 (Cth). 

Mayfair 101 Limited is an Appointed Representative of Sapia Partners LLP, a firm regulated and authorised by the Financial Conduct Authority in the United Kingdom.  Mayfair 101 Limited’s activities in the United Kingdom and the activities of Mayfair 101 in Australia, should be considered as separate activities.

© 2019 Mayfair 101. All rights reserved.

Investor Education Centre > Income Producing Investments > Fixed Income Products: What’s all the fuss about?

Fixed Income Products: What’s all the fuss about?

Fixed income products are a staple in investor portfolios worldwide; yet like the quiet cousin at your family gathering, they are far less popular than other types of investments here in Australia. So what are fixed income products exactly, and why should you consider adding them to your own investment mix?

Put simply, fixed-income products are debt instruments used by governments, corporations or other entities to raise the money they need to expand or finance their operations. Investing in fixed income products – such as bonds and bond ETFs – as a portion of your total portfolio can provide reliable income generation, protect against market volatility and safely preserve your capital. Let’s take a look at each of those benefits in more detail.

1) Income Generation - The first and most obvious benefit of fixed income products is – you guessed it – income generation. The reason people who have retired or are about to retire tend to invest more heavily in fixed income products is because when you’re retired, you need to replace the income stream that was previously generated by your work. Without a job, fixed income products offer a way to generate consistent (usually monthly) income distributions to fund your retirement.

2) Protect against market volatility - Fixed income investments like bonds aren’t subject to market volatility the way equities are, making them an attractive way to balance the risk and volatility associated with equity investing. What’s more, the market forces that influence fixed income asset values often move in different directions and at different times than the forces that affect equity markets, meaning that while your share prices are dropping in value, your fixed-income assets could be rising.

3) Safety - Investing in bonds is generally much safer than investing in equities, meaning you can usually expect that the money you invest is going to be there by the time your investment matures. Because the upfront investment and ongoing payments are all known and fixed in advance (unlike with equities), investors can expect with reasonable confidence that they will receive their money back at the end of the investment period, plus all the payments that were outlined when they first invested.

 

Risks of Fixed-Income Investing

There are risks associated with fixed-income investing, of course. The most prominent among them is the possibility of earning lower long-term returns than with equity or emerging market investments. Because fixed-income investments are generally much safer than equity investing, the returns associated with them tend to be accordingly lower as well. This can make it more challenging to meet your long-term investment goals, which is why fixed income investment products are generally best enjoyed like fine wine and dark chocolate: in moderation.

Conclusion

Regardless of whether you are just beginning to build an investment portfolio or are ready for retirement and planning to start drawing an income from your nest egg, fixed-income products represent a critical tool in the toolbox of investment options available on the market. If you don’t own any assets in the category, now is a great time to consider adding some to your portfolio.

Mayfair 101 established IPO Wealth to specifically cater for High Net Worth investors seeking income-producing investments.  For more information visit www.ipowealth.com.au

Disclaimer

This website contains general information only and is not intended to provide any person with financial advice. It does not take into account any person's (or class of persons) investment objectives, financial situation or particular needs, and should not be used as the basis for making investments.

In the Media