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.

Looking for fixed income?

Looking for fixed income?

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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. 877-903-8069

Schwab's secondary market average security count and Fixed Income specialists data are as of January 2016. Unique number of dealers is as of December 2015.

All orders placed through a Schwab representative are subject to an additional $25 fee and all orders to sell bonds must be placed through a representative. Schwab reserves the right to act as principal on any bond transaction. In secondary market principal transactions the price will be subject to our standard mark up in the case of purchases and a mark down in the case of sales and also may include a profit to Schwab in the form of a bid-ask spread. 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. Schwab will not act as both principal and agent simultaneously in the same 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.

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.

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.

Trades in no-load mutual funds available through Mutual Fund OneSource (including SchwabFunds) as well as certain other funds, are available without transaction fees when placed through schwab.com or our automated phone channels. For each of these trade orders placed through a broker, a $25 service charge applies. Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds. Funds are also subject to management fees and expenses.

Commission-Free ETF conditions:

Trades in ETFs available through Schwab ETF OneSource™ (including Schwab ETFs™) are available without commissions when placed online in a Schwab account. Service charges apply for trade orders placed through a broker ($25) or by automated phone ($5). An exchange processing fee applies to sell transactions. Certain types of Schwab ETF OneSource transactions are not eligible for the commission waiver, such as short sells and buys to cover (not including Schwab ETFs). Schwab reserves the right to change the ETFs we make available without commissions. All ETFs are subject to management fees and expenses. Please see Charles Schwab Pricing Guide for additional information.

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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.

Ready to get started?

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

The Benefits and Risks of Fixed Income Investing
  • Benefits
  • Risks
  • Benefits
    Fixed 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. 
  • Risks
    Just 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.

  • Generate Income icon

    Generate Income

    Use fixed income securities to provide a regular, predictable stream of revenue.

  • Diversify icon

    Diversify your portfolio

    Help smooth out the highs and lows in a stock portfolio with fixed income securities.

  • Protect icon

    Protect your investments

    Add stability to your portfolio with high-quality fixed income investments, like Treasuries, CDs, or other highly rated bonds.

  • Tax icon

    Create tax benefits

    Some fixed income securities, like municipal bonds, generally have preferential tax treatment where coupon payments Tooltip may be exempt from federal and state income taxes.

Consider your investing style:

Professional Management icon

Get professional management of your fixed income.

  • Wasmer Schroeder™ Strategies

    Wasmer Schroeder Strategies offer a wide range of fixed income separately managed accounts across the duration, credit, and tax-efficiency spectrums. The choices include actively managed and bond ladder portfolio strategies with both taxable and tax-exempt debt securities. Investment minimums start at $250,000.

  • Other professionally managed solutions

    Discover a wide range of wealth and investment management solutions, including separately managed accounts for specialized investment strategies to help you meet your needs. Investment minimums vary by service but may start as low as $5,000.

Own icon

Manage your own fixed income investments.

Take advantage of our fixed income expertise.

Stay at the forefront of modern investing with insights and ideas from Schwab experts, including Kathy A. Jones, Managing Director and Chief Fixed Income Strategist, Schwab Center for Financial Research.

Kathy Jones, Managing Director and Chief Fixed Income Strategist

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

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GENERATING INCOME IN RETIREMENT

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Common questions

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.

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.

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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