Once capital has been accumulated, many investors believe that the time has come to "take risk off the table" or, in other words, secure it safely in a low-risk environment where it can quietly generate income without losing its purchasing power.
For many, this is when fixed income investment comes into its own. Fixed income investments come in a variety of forms including sovereign debt, corporate debt, savings bonds and guaranteed income certificates.
At Preston Stanley, we are primarily concerned with the first two, sovereign and corporate debt. We use them to generate regular, reliable income to clients who need it.
Sovereign debt is debt issued by nations via their treasuries who borrow money from investors for a fixed period anywhere from 6 months to 30 years.
They agree to pay a coupon or a "yield" of a fixed percentage for the duration of the term of the loan and then repay the principal upon maturity (when the term of the loan expires). These are considered very safe investments with low volatility and they carry the backing of a national government.
Corporate debt is similar but the main difference is that companies are considered more likely to fail than national governments so the interest rates are usually more generous. Much of the investment we do in fixed income for our clients is done via pooled investments eg bond funds or exchange-traded funds.
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Contact us today to learn more about how our financial management services can help you to realize your financial aspirations.