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Fixed income investments explained

Looking for a set rate of return? Think fixed income

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    Find fixed income investments listed on the UK and global markets

  • EQI EXPLAINS

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    A type of loan and are a way for retail companies to raise funds in exchange for a fixed rate of return

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    What is an IPO, how are they priced and how do you apply?

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    Complex financial instruments

    Further investment options for experienced investors

What is a fixed income investment?

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.

  • EXAMPLE

    How it works

    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.

  • What's the appeal?

    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.

    • You know what return to expect, and how often over a set period
    • You are not tied in and can sell the investment at any time during the set period
    • Investors don’t have to pay Stamp Duty Reserve Tax
    • Typically lower risk than other asset classes because, unless the issuer of the bond or gilt defaults, you will get back your original value of your investment when it reaches maturity (or if the issuer repays earlier)

Types of fixed income investments

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.

  • Government bonds

    Also known as gilts, these are fixed-interest securities issued by a government

  • Corporate bonds

    Fixed-interest securities issued by a corporation

  • Convertible bonds

    Similar to a corporate bond but with the option to convert your investment into shares or cash of equal value

  • PIBS

    Short for Permanent Interest-Bearing Shares, these are fixed-interest securities issued by a building society

  • What risks should I expect with fixed income investments?

  • What are bond funds?

  • What impact does the market have on gilts and corporate bonds?

  • Can I buy and sell fixed income investments as I would shares?

Other investment choices

  • Funds

    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.

  • Exchange-traded funds (ETFs)

    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.

Which account is right for you?

  • Dealing Account

    For individuals or a group of up to four people, access global investments with this flexible, unrestricted account

  • Flexible ISA

    Invest up to £20,000 per year, take advantage of tax-free investing, and access your money at any time

  • SIPP

    Enjoy more control and access to a wider range of investment options and benefit from attractive tax advantages

  • Lifetime ISA

    Available for those aged 18-39, you can invest up to £4,000 per year and the government will add a 25% bonus up to a maximum of £1,000