The Benefits of Fixed Income Investing

Bonds provide investors with a wide range of investment opportunities than can complement a portfolio. Also known as fixed income investments, bonds are loans investors make to issuers, which can include governments, municipalities, corporations or other entities. Adding bonds to a portfolio may result in an important level of diversification. Bonds can also serve some very specific investment needs, such as providing retirement income. Associates of J. Patrick Murphy Private Wealth Management, Inc.^®, can help you determine if adding bonds to your portfolio may be right for you, and then offer bond investments that are suitable to your needs.   

Why Fixed Income?

Historically, bonds have demonstrated less volatility than stocks. Less volatility increases the likelihood that investors meet their objectives at any given point in time. Bond returns often have a low, and sometimes negative correlation to stock returns. In other words, they react differently than stocks to market and economic conditions. The result is an overall balancing of a portfolio. So while you may sometimes be tempted to pursue stock market performance in lieu of bonds, over the long term you may be better served by staying properly diversified.

In addition to the potential benefit of diversification, many investors seeking monthly income choose fixed income investments to provide that income stream. Income streams can vary depending on changes in the underlying bonds and their payments. Those who don't need the income each month often choose to reinvest the dividends. Dividend payments can be used to supplement retirement income or even to handle current expenses. If these are your goals, then it may be important to select fixed income investments with a payment schedule tailored to your needs. Most individual bonds pay steady streams of ncome through semi-annual payments, howeversome issuers nowoffer bonds that pay monthly or quarterly interest. 

Fixed Income Strategies for You

Many investors seek out the tax-exempt status of certain types of fixed income investments, such as municipal bonds. Unlike their taxable counterparts, income from municipal bonds is generally exempt from federal, state and loc income taxes, depending on the issuer and state in which the bonds are issued. If you are subject to a higher marginal Federal ordinary income tax rate and plan to hold your fixed income investments in a taxable account, then municipal bonds or municipal bond funds may be a wise choice for you. While tax-exempt fixed income investments may offer lower yields, often because of their tax-free status, these investments may actually result in more income on an after-tax basis than higher yielding taxable investments. At J. Patrick Murphy Private Wealth Management, Inc.^®, we can work with you to determine which fixed income investments most positively affect your return and tax status.

Lets Get Started

With access to one of the industrys most experienced fixed income trading desks, we can provide you with an array of fixed income products to help meet your needs. Among the many fixed income options we offer are municipal, government, corporate, mortgage backed bonds, certificates of deposit and unit investment trusts. Together we can review the various factors for fixed income investments.

Call us today at 888.444.9979 and we'll get started determining whether adding fixed income to your portfolio may benefit you.

Return to top of page

Fixed income investing entails credit risks and interest rate risks. When interest rate rise, bond prices generally fall and the fund’s share prices can fall. Stocks and bonds have different risks, since bonds, if held to maturity, may offer both a fixed rate of return and a fixed principal value. Municipal bonds are subject to numerous risks, including higher interest rates, economic recession, and deterioration of the municipal bond market, possible downgrades and defaults of interest and/or principal.