HopefullyInLawSchool
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Simple English definitions for legal terms
fixed-income investment
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A quick definition of fixed-income investment:
A fixed-income investment is when someone puts their money into something that will pay them a set amount of money regularly, like a bond or a savings account. The value of this investment stays the same until it is sold, and it usually cannot be redeemed early unless the company who issued it allows it. It's like putting your money into a piggy bank that gives you a certain amount of coins every week, and you can't take them out until a certain time.
A more thorough explanation:
A fixed-income investment is a type of investment that pays a fixed amount of income to the investor over a set period of time. This income can come from bonds, preferred stocks, or other securities that pay a fixed dividend or interest rate.
- Bonds held to maturity: When an investor buys a bond and holds it until it matures, they will receive a fixed amount of interest payments over the life of the bond.
- Government securities: Certain government securities, such as Treasury bonds, pay a fixed rate of interest to investors.
- Savings accounts: Some savings accounts pay a fixed interest rate to account holders.
These examples illustrate the definition of fixed-income investments because they all provide a fixed amount of income to the investor over a set period of time. The investor knows exactly how much they will earn from these investments, making them a popular choice for those who want a predictable source of income.