Fixed Income Investing
Fixed income investments are designed to generate a specific level of interest income, while also providing diversification, capital preservation, and potential tax exemptions.
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Looking for help solving your fixed income challenges?
Count on Schwab, where we can access thousands of individual bonds from hundreds of dealers across the marketplace; for straightforward pricing so you keep more of your money; for access to over a thousand new issues every year; plus hundreds of no-load funds and commission-free bond ETFs.
Schwab Fixed Income Specialists can help meet your goal with unbiased guidance. Leveraging their advice and experience to review and recommend a fixed income strategy customized to one important investor: You.
From income to diversification, call a Schwab Fixed Income Specialist to meet your specific needs. 877-906-4670
Investment and Insurance Products: Not a Deposit • Not FDIC Insured • Not Insured by any Federal Government Agency • No Bank Guarantee • May Lose Value
Schwab's secondary market average security count and Fixed Income specialists data are as of January 2024. Unique number of dealers is as of December 2015.
Schwab reserves the right to act as principal on any fixed income transaction. When Schwab acts as principal in a secondary market transaction, the bond price includes our transaction fee (as outlined in the Charles Schwab Pricing Guide), and may also include a markup that reflects the bid-ask spread and is not subject to a minimum or maximum. When trading as principal, Schwab may also be holding the security in its own account prior to selling it to you and, therefore, may make (or lose) money depending on whether the price of the security has risen or fallen while Schwab has held it. When Schwab acts as agent, a commission will be charged on the transaction.
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.
Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. Shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV).
No-load mutual fund conditions:
Schwab's short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource® service and certain other funds with no transaction fee and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading. Funds are also subject to management fees and expenses.
Charles Schwab & Co., Inc., member SIPC, receives remuneration from fund companies participating in Schwab's Mutual Fund OneSource® service for record keeping, shareholder services and other administrative services. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services.
Commission-Free ETF conditions:
ETFs at Charles Schwab & Co., Inc. ("Schwab") which are U.S. exchange-listed can be traded without a commission on buy and sell transactions made online in a Schwab account. Unlisted ETFs are subject to a commission. Please see pricing guide for additional information. Schwab does not receive payment to promote any particular ETF to its customers. Schwab's affiliate Charles Schwab Investment Management, Inc. ("CSIM") serves as investment advisor to the Schwab ETFs, which compensate CSIM out of the applicable operating expense ratios. The amount of the fees is disclosed in the prospectus of each ETF.
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Understanding fixed income investments
Fixed income investments are designed to generate income and help provide capital preservation. If you’re looking for potential tax benefits and want to diversify your portfolio, high-quality fixed income investments could be an option for you.
Bonds, such as U.S. Treasuries and corporate or municipal bonds, are traditional types of fixed income investments. Investors may also consider mutual funds and ETFs that hold fixed income investments.
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Why invest in fixed income?
Whether your goal is to diversify your investments, save for the future, receive dependable income, preserve principal, or help minimize taxes, fixed income investments could be a way to reach your goals.
The Benefits and Risks of Fixed Income Investing
- Benefits
- Risks
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BenefitsFixed income investments generally carry lower risk than stocks. They also function well as a way to generate income or value from your investments on a consistent basis.RisksJust because fixed income funds usually are less risky options doesn't mean there is no risk involved. As with stocks, your fixed income investment could be affected by external factors such as market conditions, inflation, or interest rates.
Think about your fixed income objectives.
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Generate IncomeUse fixed income securities to provide a regular, predictable stream of revenue.
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Diversify your portfolioHelp smooth out the highs and lows in a stock portfolio with fixed income securities.
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Protect your investmentsAdd stability to your portfolio with high-quality fixed income investments, like Treasuries, CDs, or other highly rated bonds.
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Create tax benefitsSome fixed income securities, like municipal bonds, generally have preferential tax treatment where Tooltip may be exempt from federal and state income taxes.
Consider your investing style:
Get professional management of your fixed income.
Talk to a Schwab Fixed Income Specialist.
Our specialists offer objective, non-commissioned guidance on a wide range of fixed income products and strategies including ladders, bullets, barbells, and more. You can expect personalized service on topics such as:
- Help with choosing from a wide variety of investment options
- Suggestions for adjusting to changing market conditions
- Assistance with using our online trading features
Call 877-903-8069
Make the shift from saving to spending.
As you near retirement, you need to be sure you've built an income strategy that'll cover the future of your dreams. See how Schwab can help you maximize your assets and build a plan for what's to come.
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Common questions
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There are many different types of fixed income investments, with each type offering different risk and return characteristics. U.S. Treasuries are the most common type of fixed income investment and are generally considered to have the highest credit quality as they are backed by the full faith and credit of the U.S. government. Other examples of fixed income investments include certificates of deposit (CDs), municipal bonds, and corporate bonds.
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Investors who prefer to invest through funds can consider either bond mutual funds or bond exchange-traded funds (ETFs). Bond mutual funds and ETFs can offer professionally managed, diversified investments for investors, for a fee. Investors can purchase a bond mutual fund or ETF just like they would place an order for most other mutual funds or ETFs.
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The safety of a bond fund depends on the risks of its underlying holdings. There are two primary risks with fixed income investments, credit risk and interest rate risk. Credit risk is the risk that the issuer won't pay the investor back in a timely fashion and interest rate risk is the risk that the value of the fixed income investment will fall if interest rates rise. A bond fund that mainly invests in highly rated investments, like U.S. government securities or investment grade corporate or municipal bonds, would generally be considered to have low credit risk, but the value of the fund may still fluctuate as interest rates fluctuate. A fund with a shorter duration, a measure of interest rate risk, will fluctuate less in price than one with a longer duration, all else equal.
Unlike individual bonds, most bond funds don't have a maturity date or a predictable value at maturity. Individual bonds can help investors plan for future expenses given their stated par value and maturity dates, but bond funds don't offer that same benefit.
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