Table of Contents
Types of Bank Investments
Certificate of Deposit
Types of IRAs
401k Plans
Types of Bond Investments
Fixed Income Investing
Navigate This Post
Fixed Income Investing
Annuity
Bank Loan Funds
These are investments which afford a regular and pre determined yield. While bonds are also fixed income investments, there are many others that can be categorized under this heading.
Permanent insurance products that combine savings with the basic insurance goals are a type of popular fixed income investments. These products allow you to invest in the form of premiums and allow your money to grow tax deferred.
Loans are also allowed against the existing value of your policy. Universal, variable and whole life plans offer different benefits, varied repayment terms and also differ in the way the underlying investments affect your total policy value.
Annuity
The annuity offers a regular income stream during retirement. It is basically a contract with an insurance company and duplicates a pension plan in its repayments. These are complex instruments and a thorough understanding is necessary before you buy them. Remember that these instruments do not offer much in the way of tax benefits as the earnings are taxed at repayment time as ordinary income.
The high fee also puts off many investors. However, an annuity can give you great flexibility with respect to managing your portfolio without costs. The freedom to make contributions without age restrictions lets you add to your savings on a continuous basis.
Bank loan funds are another fixed income option with yields higher than other such instruments. The higher yield can be attributed to the short term nature of the underlying loans that make up the loan fund.
The fact that they are more risky than the other fixed income investments is a primary reason for the higher interest they yield.
Many investors choose these products in spite of the absence of FDIC backing. They believe that any risk is set off by the assets of the company, which are put up as collateral for the original loans.
While safety in investment is a critical factor to consider while creating your portfolio, it also has to be balanced with adequate returns and liquidity. The investment options discussed above offer some good solutions to achieving this objective.
Letter of Comment