Looking for a set rate of return? Think fixed income
Whilst there are different types of fixed income investments, such as bonds or gilts, what these securities have in common is investors lend money in return for a fixed rate of interest, also known as a yield.
Think of yourself as a lender, providing money to companies or governments for a fixed rate of return, on a fixed schedule, until an agreed maturity date, at which point your original loan is returned.
Gilts is the name given to securities issued by the UK Government, with securities issued by companies known as corporate bonds.
The amount of interest offered, which can also be referred to as the coupon, varies considerably. It is offered as a percentage, much as a typical cash savings rate would be.
Here’s an example of how it works with a 4% Treasury Gilt 2027
That would mean that if you invest £1,000, you will receive 4% interest, or £40 a year, until your loan is repaid in 2027.
For UK government gilts, the annual yield is paid semi-annually, at six-month intervals.
The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.
EQi does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.
The extent and value of any ISA tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change.
With the interest rate on cash savings low, fixed income investments attract investors as they offer fixed yields. They are not risk free but do have features that appeal to investors.
At EQi, we offer access to a wide-range of fixed income investments plus our fixed income selector search tool provides key information for you to review before deciding whether to invest.
Also known as gilts, these are fixed-interest securities issued by a government
Fixed-interest securities issued by a corporation
Similar to a corporate bond but with the option to convert your investment into shares or cash of equal value
Short for Permanent Interest-Bearing Shares, these are fixed-interest securities issued by a building society
A convenient way to buy into a ready-made basket of investments. Review analysis provided by independent research experts Square Mile, to help narrow down which choice would be the best fit for your income goals.
Another pooled investment product, which typically tracks a market index. If you know the name of the fund you are looking for, use our Find ETFs & ETCs tool to search and select.