Business / Taxes / Fixed-Income Investment: Fixed-income investments typically pay interest or dividends on a regular schedule and may promise to return your principal at maturity, though that promise is not guaranteed in most cases. Among the examples are government, corporate, and municipal bonds, preferred stock, and guaranteed investment contracts (GICs). The advantage of holding fixed-income securities in an investment portfolio is that they provide regular, predictable income. But a potential disadvantage of holding them over an extended period, or to maturity in the case of bonds, is that they may not increase in value the way equity investments may. As a result, a portfolio overweighted with fixed-income investments may make you more vulnerable to inflation risk.
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