Global investment markets have been exposed to sudden and unpredictable factors, making it challenging for potential investors to find a reliable option that can resist these changes. People are also becoming increasingly conscious about their investment decisions, especially with the onset of the COVID-19 pandemic and the ongoing inflation surge.
Recently, fixed-term or fixed-rate bonds, designed to offer a fixed rate of return during a set period, have become a solid choice for investors looking for stability and steady income in an ever-changing financial landscape.
Here is a simple breakdown of fixed-term bonds, how they work, and their role in offering stability as a promising investment option.
What Is It?
As the name suggests, fixed-term bonds, also referred to as fixed-rate bonds, are a type of bond that offers a fixed interest rate throughout the life of the bond. This rate is generally less than a floating bond rate.
The unique feature of this bond that enhances its stability compared to other investment options is its constant interest rate, which is not subject to change with the market conditions. This means the bondholder is thoroughly aware of the returns to expect during the period, giving more control over their future financial plans.
How Do They Work?
When a company or government issues a fixed-term bond, they will specify the duration of the bond and the interest rate the bondholder will receive throughout the period. The interest rate can be higher or lower depending on the issuer’s creditworthiness and market conditions.
Investors will receive their capital at the end of the maturity. Anyone wanting to cash out before maturity will incur losses, often depending on the bond’s current market prices.
What Makes Them A Stable Bond Investment
Steady Returns And Income Stream
Fixed interest rates promise a steady income stream, which benefits people willing to keep risks minimal with their investment in Dubai. This makes it an ideal bond option for retirees or individuals looking for a reliable cash flow to complement their income.
Protection Against Inflation
Once the bond is purchased, it is secured for steady returns until maturity, according to the fixed interest rate agreed upon. This means that market conditions or changes will not affect the returns. Investors experiencing economic or political instabilities in their countries can expect to benefit from this investment during uncertain times.
Informed Investment Period
As fixed-term bonds come with a predetermined maturity date, it gives investors a clear idea of when they will receive the capital. This feature gives plenty of time and transparency to plan individual financial goals and other investment decisions ahead.
Choosing The Best Option
Investing in fixed-term bonds offered by corporations comes with a credit risk. These concerns can occur if the bond-issuing company faces financial challenges or defaults with its debt obligations, resulting in bondholders not being able to receive the full interest payments or the capital.
This is where financial advisory and consultancy firms like AIX Investment can help you out. With over a decade of experience in the local investment advisory industry, they have the expertise and tested methods to guide you towards smart choices.
They can help you analyze available options and customize a secure financial strategy with minimal risks. Their AIX bond is a publicly listed corporate Bond with a fixed coupon rate of return and a fixed tenure.
It offers a 4.5% quarterly coupon payout and a maturity period of 36 months, allowing you to earn 54% in 3 years. It also features many other unique offerings compared to regular bond investment options in the market.
For more information, please visit AIX Investment Group or call +971 4 546 0000.