Fixed income refers to a type of investment that provides a predictable and stable stream of income over a specified period. It is commonly associated with debt securities or bonds issued by governments, municipalities, corporations, or other entities. When an investor purchases a fixed income security, they are essentially lending money to the issuer in exchange for periodic interest payments and the return of the principal amount at the maturity date.

Key characteristics of fixed income investments include:

Regular Interest Payments: Fixed income securities typically pay interest at regular intervals, such as semi-annually or annually. The interest rate, also known as the coupon rate, is predetermined at the time of issuance and remains fixed throughout the life of the bond.

Fixed Maturity Date: Each fixed income security has a specific maturity date, which is the date on which the issuer is obligated to repay the principal amount to the investor. The maturity period can vary, ranging from a few months to several decades.

Preserved Principal: Unlike stocks or equities, where the value of the investment can fluctuate significantly, fixed income investments aim to preserve the principal amount. At maturity, the issuer is expected to repay the full face value of the bond to the investor.

Lower Risk Profile: Fixed income securities are generally considered less risky than equities because of their predictable income stream and the expectation of receiving the principal back at maturity. However, it's essential to note that all investments carry some level of risk, and factors such as changes in interest rates, credit quality of the issuer, and inflation can impact the overall risk of fixed income investments.

Diversification: Fixed income securities can serve as a vital component of a diversified investment portfolio, providing a balance to riskier assets like stocks.

Investors often include fixed income securities in their portfolios for capital preservation, steady income, and diversification purposes. The choice of fixed income investments depends on an individual's risk tolerance, investment goals, and market conditions.