Mutual Funds
Fixed Income Investments
What Are Fixed Income Investments?
Fixed income investments are designed to provide more predictable income streams over a set period of time. Common examples include bonds, GICs and money market securities. Many investors use fixed income investments to help diversify their portfolios, generate income and reduce overall portfolio volatility compared to stocks.
Benefits of Fixed Income investments
Why Investors Use Fixed Income Investments
Investors often include fixed income investments in a portfolio for a few key reasons:
Income generation: Many fixed income investments pay regular interest income
Portfolio diversification: Fixed income may help offset stock market volatility
Capital preservation: Some investors prioritize stability over higher growth potential
Predictability: Many fixed income investments have defined maturity dates and payment schedules
Things to consider
- Fixed Income investments can have some risk associated with interest rate changes that may affect their prices. They can also be affected by credit, inflation, liquidity or default risk.
- Bond prices can fall when interest rates rise.
- Credit risk may affect the issuer’s ability to make interest payments/ service its debt obligations.
TAKE NOTE
Fixed income investments are often considered lower risk than stocks, but “lower risk” does not mean “risk free.” Bond prices can still fluctuate, especially when interest rates rise.
Are Fixed Income investments right for me?
Fixed income investments may appeal to investors looking for more stability, predictable income and lower risk than equities. They can also play an important role in helping diversify a portfolio.
- Choose from bonds, GICs and money market investments
- Know your interest rate and maturity date in advance
- Add balance alongside more growth-focused investments
Types of Fixed Income investments
Fixed income vs equity
Fixed income investments and equities each play different roles in a portfolio. While fixed income investments are generally focused on stability and income, equities are typically associated with long-term growth potential. Understanding how they differ can help investors build a portfolio that aligns with their financial goals and risk tolerance.
Fixed Income | Equities |
Designed to provide regular interest income | Designed to produce long-term growth potential |
Includes bonds, GICs and T-bills | Includes stocks and ETFs |
Generally lower risk compared to equities | Generally higher risk compared to fixed income |
Generally lower return potential compared to equities | Generally higher growth potential compared to fixed income |
Generally more stable compared to equities | Generally more volatile compared to fixed income |
Focused on income and capital preservation | Focused on capital appreciation |
Both fixed income and equities can play an important role in a diversified investment portfolio. The right mix depends on your goals, timeline and risk tolerance.
With TD Direct Investing, you can explore a range of fixed income investment options and build a portfolio that fits your financial objectives.
A Deeper Dive into Fixed Income
TD Direct Investing clients have access to the following resources and tools at the TD Direct Investing Fixed Income Centre in WebBroker:
-
Buy, sell or request quotes for money market paper and bonds online
-
Search for a bond that meets your needs
-
Find prices, yields and credit ratings on hundreds of bonds and money market instruments
We offer the following bonds:
-
Government of Canada bonds
-
Government agency bonds
-
Provincial and Municipal bonds
-
Investment Grade Corporate bonds
-
Strips (Zero Coupon) and Residual bonds
-
U.S. Pay bonds
We also offer high yield grade bonds.
Our money market offerings include:
-
Government of Canada and Provincial Treasury Bills
-
Bankers' Acceptances & Bearer Deposit Notes
-
Commercial Paper
For more information, please contact an Investment Representative at 1-800-465-5463. We're here for you. Monday to Friday, 7 am to 6 pm ET.
The Fixed Income asset class of securities usually consists of government and/or corporate bonds. Essentially they are a loan to a corporation or government. They provide a fixed income stream.
Equity, on the other hand, is represented by stocks and is associated with money raised through shareholders to help fund a company. Equity provides ownership of a company and allows an investor to participate in its growth through share ownership.
Fixed income investments typically include bonds, GICs, treasury bills and money market securities. These investments generally provide scheduled interest payments and return the original investment at maturity.
Fixed income investments are generally considered lower risk than stocks, but they still carry risks including interest rate risk, inflation risk and credit risk.
When interest rates rise, existing bond prices typically fall. This is because newer bonds may offer higher yields, making older bonds less attractive.
A bond is a loan to a government or corporation that may fluctuate in value before maturity. A GIC (Guaranteed Investment Certificate) offers guaranteed principal protection if held to maturity.
Yes. Some fixed income investments, especially bonds, can fluctuate in market value before maturity depending on interest rates and market conditions.
Some investors use fixed income investments to help reduce portfolio volatility and provide more stable returns during uncertain market conditions.
Fixed income pricing: clear and simple
Commissions for Bonds, Strip Coupons, GICs, T-Bills and other fixed income and money market products are included in the quoted price.
Start investing in Fixed Income investments with TD Direct Investing
-
1
Open an account
Select the TD Direct Investing account you want to open online or book an appointment.
-
2
Fund your account
Transfer funds into your account with the online bill payment or funds transfer feature – or set up recurring deposits.
-
3
Start investing toward your goals
Build your portfolio using ETFs, stocks, options, mutual funds, GICs, and more.
Explore other investment types
Open an account online – it's fast and easy
Whether you're new to self-directed investing or an experienced trader, we welcome you.
