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Fixed Interest Plans

Take comfort knowing exactly how much interest you will earn with our fixed rate saving plans.

By choosing our Fixed Rate Saver, you can invest your money with the assurance of a set interest rate and the knowledge of how much return you can expect.

Fixed Interest bonds are essentially loans made to governments or companies that promise to pay a predetermined amount of income, known as the “coupon,” for a fixed period of time. At the end of that term, the bond issuer is obligated to repay the borrowed capital.

Why Invest in Fixed Interest Securities

Fixed interest securities are crucial components of diversified investment portfolios due to their ability to:

  • Generate a dependable income stream and provide liquidity.
  • Offer an element of capital security, as these securities represent a loan to either a government or a company that is guaranteed to repay the bondholder the initial capital loaned at the end of the specified period.
  • It helps balance the overall risk of a portfolio, since they tend to have a lower risk profile compared to other investments, such as equities or commodities.
  • Offer stability and predictability in income returns, as the coupon payments are usually fixed and paid out on a regular basis.
  • Provide an opportunity to invest in a wide range of sectors and geographies, allowing investors to diversify their exposure and manage risks.

Types of Plans:

There are several types of fixed interest plans, including:

  1. Government bonds: These are issued by governments to fund their operations and pay off debts. They are considered low-risk investments, as they are backed by the government, but typically offer lower returns than other types of fixed interest plans.

  2. Corporate bonds: These are issued by companies to raise capital. They are typically riskier than government bonds, but offer higher returns.

  3. High yield bonds: Also known as junk bonds, these are issued by companies with low credit ratings. They offer higher returns than other fixed interest plans, but come with a higher risk of default.

  4. Fixed rate savings accounts: These are savings accounts that offer a fixed interest rate over a specified period of time. They are typically considered low-risk investments.

  5. Money market funds: These are mutual funds that invest in short-term, low-risk fixed interest securities, such as Treasury bills and commercial paper. They offer relatively low returns, but are considered very safe investments.

What are the risks involved?

Like all investments, fixed interest plans also carry some risks, including:

  1. Interest rate risk: When interest rates rise, the value of fixed interest investments decreases, as investors are more likely to move their money into higher-yielding investments.

  2. Credit risk: There is a risk that the bond issuer will default on its payments, resulting in a loss for the bondholder.

  3. Inflation risk: Inflation can erode the purchasing power of fixed interest investments over time, reducing the real value of the income received from them.

  4. Liquidity risk: Fixed interest investments can be less liquid than other investments, making it difficult to sell them quickly if needed.

  5. Currency risk: If fixed interest investments are issued in a foreign currency, fluctuations in exchange rates can affect their value.

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