These investments pay a fixed amount according to a set schedule, and are usually issued by a corporation, municipality, government or government-sponsored agency.
Fixed-income investments such as bonds and guaranteed investment certificates (GICs) are an important part of a well-diversified portfolio. Fixed-income investments pay interest at specified times in fixed amounts and are usually issued by a corporation, municipality, government or government-sponsored agency.
There are two primary reasons why investors may want to include fixed-income investments in their portfolio:
- Income – Fixed-income investments provide a stable and regular stream of income.
- Diversification – Fixed-income and equity (stock) prices tend to move in different directions over time, which can help smooth out your investment performance.
We have the rates you want, with the names you know. A corporate bond usually has a fixed interest rate, so you'll receive set payments typically twice a year. Use these payments for portfolio protection or as an income stream.
Guaranteed Investment Certificates
GICs can help you reach your investment goals with fixed income payments.
Government bonds are backed by the federal government and are among the most secure investments available.
Like Government bonds, Provincial bonds are backed by the full faith and credit of the provincial government. making them among the most secure investments available.
Structured bonds are a hybrid security, with maturity dates that can be extendible or coupon payments that can be increased, otherwise known as "stepped up".
U.S. Corporate Bonds
Similar to corporate bonds, these bonds are issued by U.S. corporations. The difference is, your fixed income payments are paid in U.S. dollars.
While issued by a Canadian corporation, province, or government, Yankee bonds provide you with income in U.S. dollars.
Zero Coupon Bonds
Unlike regular bonds, zero coupon bonds don't pay regular interest or coupons. Instead they render a profit at maturity, when you can redeem them for their full face value. That's why they can be purchased at a deep discount.
Before investing in bonds, you should understand the risks involved, including credit risk and market risk. Bond investments are also subject to interest rate risk such that when interest rates rise, the prices of bonds can decrease, and the investor can lose principal value if the investment is sold prior to maturity.