If you’re someone who earns a fixed monthly salary, then chances are that you’re familiar with the challenges of having a limited disposable income. With costly expenses such as housing, food, and education, feelings of financial restriction are not uncommon. Fortunately, with the right amount of planning, you can pave your path to higher financial freedom.
For many people, particularly seniors, fixed-income investments are proving to provide the best way forward to achieving financial independence. These investments provide consistent returns on your initial investment, meaning that you can become a beneficiary of continual financial growth. Let’s take a look at the best fixed-income investments available to you so that you can effectively grow your retirement savings.
How Fixed-income Works
Fixed income funds provide investors with a monthly payout. This means that retirees who invest in a fixed income fund can continue to receive a steady income even after leaving their full-time jobs. In fact, most fixed-income funds are specially designed for retirees so that they can cover their monthly expenses. While a set amount is typically paid out to the investor on a monthly basis, there are sometimes the options for receiving weekly, quarterly, or annual payouts.
Oftentimes, seniors invest in multiple fixed income funds. This is done as a means of diversifying one’s risk. For example, one fund could provide stable, regular payouts while another fund could be a little more high risk. There is also the option for reinvesting a portion of your returns back into the fund, thereby allowing for the potential to receive higher payouts in the future.
Remember to do thorough research before committing to a fixed income fund. After all, not every fund comes with the same level of risks and rewards.
What Fixed Income Funds Are Available to You?
There are plenty of different fixed-income funds available to you, depending on your financial goals. While some people prefer to handle their own fixed income portfolio management, others prefer to invest in fixed income ETFs or managed funds. Of course, there is always the option to consult with a professional financial adviser, who will help you to select high yield investments for a fee.
Here are the categories of fixed-income investments that you can consider investing in:
Treasury bonds: These bonds are issued by the U.S. government. While they are typically low in risk, they offer minimal returns.
Government and agency bonds: these types of bonds are offered by a variety of nation’s governments, with risk varying depending on the country in which that government operates.
Municipal bonds: these are bonds that are issued by local municipalities across the United States. These are low-risk bonds that exempt from income taxes.
Corporate bonds: some of the best performing fixed-income funds come in the form of bonds issued by companies looking to raise capital. These can be high-yielding bonds should these companies enjoy substantial growth.
Mortgage-backed securities: these mortgages are sold by banks and can often provide investors with substantial fixed income.
Certificates of deposit: this is one of the most easily accessible fixed income trading options available. While certificates of deposit carry very low risk, returns are also minimal.
Preferred stock: An opposed to issuing bonds, some companies decide to rather raise capital by issuing special notes that can be converted to common stock at a later stage.
Why You Should Seriously Consider Investing In Fixed-Income Funds
Here are some of the major reasons as to why fixed-income investments are ideal for retirees as well as those approaching retirement:
- While fixed-income investments allow you to plan for your future, they do not require you to consistently dip into your capital during times of financial difficulty.
- Many fixed-income investments are exempt from tax, meaning that you can avoid being subject to financial loss as a result of tax increases and other tax risks.
- There re several fixed-income funds, such as treasury bonds and municipal bonds, that carry low levels of risk compared to other investments.
- Adding fixed-income investments to your portfolio results in a more diverse portfolio that will provide you with more protection during times of economic uncertainty.
Find the Right Fixed-Income Investment For You!
As you have now seen, fixed-income investments provide a whole host of benefits that can play an enormous part in securing your financial stability in the future. This is particularly true for people who are in or near retirement, as fixed-income funds can pay out a steady monthly income that can greatly help you remain financially independent.
Of course, it’s important to remember that not every fixed-income investment out there is going to meet your personal financial requirements. It is, therefore, vital that you conduct sufficient research before choosing a fixed-income fund to invest your hard-earned money into.
Start by conducting an online search of the different types of funds available to you as well as some highly- recommended financial advisers in your area. By consulting with a professional financial adviser, you can be pointed in the right direction. It is advisable that you get a number of opinions from various authorities so that you can make the soundest financial decision. After all, by making the right investment decision, you can secure your future income while ensuring that you remain financially stable and independent!