Fixed income denotes a type of investment-style in certain types of assets, where the borrower or issuer makes fixed payments at fixed periods. Fixed income refers to both elements, the schedule of the payment as well as the amount to be paid. This type of investment yields a fixed return and is considered to be a relatively a lower risk investment compared to equity. This term may also include fixed income investments like bonds, preferred stocks and pensions that guarantee a fixed income from the investment.
Investors may look for a larger fixed income component of their portfolio of investments toward retirement when they will drawn down assets and require a require a more secure income stream. However, depending on the fixed income investment, savings can be impacted by the risk of inflation.