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Turning to Fixed Interest Investments

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Fixed Interest

Fixed Interest Investments

The volatility of the stock market has caused many investors to reconsider fixed interest investments. When the stock market was booming, many of these same investors were skeptical of these investment schemes. They wanted the opportunity provided by the stock market to earn varying rates of return with their money.

Fixed interest investments expect an investor to deposit money and let it sit for a set time period. During that time, the investor receives a regular payment from the account. At the end of the term, the original deposit is returned to the investor.

Five Types of Fixed Interest Investments

• Cash at Call — These are types of savings accounts. The highest-paying examples are found in online accounts.

• Term Deposits — Banks and other financial institutions offer these accounts. They lock away money for set time periods in return for fixed interest rates.

• Government bonds — These investments are essentially loans made to governments. In return for the loan, the government agrees to pay investors a yearly interest rate and return the original deposit upon the date of maturity.

• Inflation-linked bonds — The interest rates for these bonds are usually lower than they are for traditional government bonds. However, the value of the overall investment increases with inflation.

• Corporate bonds — As with government bonds, buying these bonds constitutes a form of loan made to the vendor. The corporation agrees to pay the money back with interest. These investments are riskier than government bonds because there is less certainty that the corporation will be able to pay them back.

Some of these investments have high minimum deposit requirements. As such, they are only available to investors with considerable funds available. Some fixed interest investments, however, are open to any member of the public.

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