08:22 14 February 2013
There are various types of fixed income investmentavailable and choosing the right mix of investment in the correct proportions will yield the income that every investor dreams of.
It would be a good idea to have the fixed income investment equally distributed in different investment types so that risks to the principal will be balanced versus the income earned.
The fixed income money can be distributed between a number of funds with each fund different but serving a specific need. It could be agency bonds, government bonds, municipal bonds, corporate bonds, high yield bonds, and foreign bonds in dollar denomination and some in local currencies.
The investments can have varying durations and maturities. On a good day, the stock market value could go up, on some days when the stock market is down, another type of investment surges and some money can be earned from other types of investment.
The idea is to keep the majority of the investment in bonds being the most stable and still earn higher interest rates than treasury bonds or CD, which is currently almost paying nothing. The idea is to earn some income from other higher yielding, smaller investments to offset the minimal earnings from the bonds and balance out the instability of stocks.
However, to achieve this, much work has to be done to get the right mix.
There are rules on how one enters and exits when it comes to the market and bonds, and the investor should follow the rules. No one can just choose the tops and the bottoms, but rather we should study the trend to limit our losses. This tip is applicable to both bonds and stocks investment.
You do not have to dump your bond investment. Just study the trend and have a course of action as to when to get out or better yet, get the expert advice of an investment advisor to help you make the right decision.
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