If you’ve ever felt that the stock market is too much of a roller coaster, fixed-income investing is the calmer option. It’s basically like lending your money to the government or a company and getting regular interest payments plus your original money back on a fixed date.
Fixed vs Variable income
Unlike stocks, where your returns can jump up or down wildly depending on how well a company is doing or what’s happening in the market, fixed income gives you more predictable cash flow. In other words, you know roughly what you’ll earn and when you’ll get your capital back, as long as the person or institution you lent to doesn’t default.
Stocks are called variable income because nothing is guaranteed. A company can cut dividends, or its share price can crash by 30% in a bad year. Fixed income differs in that the interest, called the coupon, is fixed
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