EMC’s fixed income is an investment approach focused on preservation of capital and income. It typically includes investments like government and corporate bonds, CDs and money market funds. Fixed income can offer a steady stream of income with less risk than stocks. Depending on your financial goals, fixed income investments can offer many potential benefits, including:
Diversification from stock market risk
Fixed income is broadly understood to carry lower risk than stocks. This is because fixed income assets are generally less sensitive to macroeconomic risks, such as economic downturns and geopolitical events.
If you’re seeking to grow your wealth investments over time to save for retirement or other long-term goals, you probably hold a significant amount of stocks in your portfolio. But by allocating a portion of your portfolio to fixed income investments, you can potentially help offset losses when stock markets swing.
Capital preservation
Capital preservation means protecting the absolute value of your investment via assets that have a stated objective of return of principal. Investors who are closer to retirement may rely on their investments to provide income. Because fixed income typically carries less risk, these assets can be a good choice for investors who have less time to recoup losses.
Income generation
Fixed income investments can help you generate a steady source of income. Investors receive a fixed amount of income at regular intervals in the form of coupon payments on their bond holdings. In the case of many, municipal bonds, the income is exempt from taxes.
Total return
Some fixed income assets offer the potential to generate attractive returns. Investors can seek higher returns by assuming more credit risk or interest rate risk.
Contact an EMC advisor for more information on how you can maximise your potential.
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