5 Best Investments For Fixed Income

What are the 5 best investments for fixed income? Which tools will offer the most yield over the years? Fixed income investments are great for diversifying a portfolio as they can curb the risk involved with other more volatile investments such as equities. The fixed income dividends also can act as a supplement to regular income. Learn about some of the best investments for fixed income which will add security to your investment portfolio.

1. Put money in a money market mutual fund. The money market is one of the safest markets you can invest in. A fund will invest in a pool of low-risk, low-yield securities such as treasury bills, commercial paper, and bankers' acceptances. There is not likely to be huge gains, but there will be a steady flow of money—a great tool for passively increasing savings to be used at a future date.
2. Invest in treasury bills. Treasury bills, also known as T-bills, are definitely one of the 5 best investments for fixed income because they are backed by the federal government. They are considered one of the safest places to put your money. They can be purchased for varying rates of maturity, offering not only definite income, but also flexibility.
3. Check out the municipal bond market. Unlike treasury bonds which are secured by the federal government, municipals are backed by local and state governments. They are still relatively secure, and are sometimes tax-free. Look for general obligation debt to purchase.
4. Invest in CD's. Certificates of deposit are another great investment option for fixed income because they provide safe, steady growth. They are FDIC insured and flexible in terms of rates and timing.
5. Try out investment grade corporate bonds. These fixed income investments can offer a high return with a low level of risk. Investment grade bonds have been given high ratings by independent firms for their stability and strength. With an entire bond fund any risk involved in one bond is buffered by the entire pool of investments.

There are the 5 best investments for fixed income because they offer a steady flow of income. While an entire portfolio doesn't need to be rooted in fixed investments, two of three of these options can really optimize a well-rounded strategy.

Sources:

US Securities and Exchange Commission