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Understanding & Investing in Fixed Income


What is a bond?

Bonds are debt securities. When you invest in bonds, you loan your principal for the promise of repayment with interest. However, fixed income products can be complex, don't guarantee against loss and carry different risks.
Fixed income products include, but are not limited to:
  • U.S. Treasuries: Bonds issued by the U.S. government are guaranteed as to the timely payment of principal and interest if held to maturity
  • U.S. government agency bonds: Federal agencies, such as Freddie Mac and Sallie Mae, issue bonds with different terms, structures and risk
  • Corporate bonds: Private companies raise capital by issuing bonds that get grades on their investment quality
  • Municipal bonds: Issued by state and local governments, "munis" may offer income exempt from federal, state and local taxesFootnote 1
  • CDs: Certificates of deposits (CDs) are usually issued by commercial banks and insured by the FDIC
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Learn at your own pace with online courses that include:
  • Bond market interest rates
  • Buying bonds
  • The process of issuing bonds

How bonds fit within your portfolio

Creating a diversified bond portfolio with appropriate levels of risk that performs reasonably well even when markets don't move as expected can help you stay on course toward your investment goals.
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You can take online classes that include:
  • Introduction to government bonds
  • Junk bonds
  • Callable bonds

How to choose a bond or CD

Whether you're just starting out or seeking fresh ideas, Merrill provides timely and relevant tools and resources to help you along each step of your investing journey.
Play video: Bond categories
Bond categories (1:34)
This brief video can help you better understand different types of bonds.
Read: Understanding bonds and their risks
Understanding bonds
and their risks
Buying bonds is like riding a seesaw. Bond prices increase when interest rates fall, and vice versa. Understanding this concept is key to bond investing.
Read: Understanding types of bond risks
Criteria to consider
Some of the risks investing in bonds and CDs include:
Fixed income definitions
View fixed income definitions from our Glossary:
  • Bond equivalent yield
  • Callable bond
  • Par value
  • Yield to maturity
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Advanced courses about bonds include:
  • Collateralized mortgage obligations (CMOs)
  • Zero-coupon securities
  • TIGRs, CATS and LIONs

Action items for fixed income investing

Identify your objectives, risk tolerance, time horizon, investment experience and liquidity needs
Decide which bonds match your investor profile
Explore the top fixed income performers
Search for bonds
Apply search criteria to thousands of bonds and CDs with our Fixed Income ScreenerPlease login to view content
Keep an eye on specific bonds in your watchlistPlease login to view content
Carefully review the company's information
Analyze your portfolio with our investment tools and calculators
Get price, ratings and earnings alertsPlease login to view content
View your Watchlist and alerts on the Merrill mobile app

Related resources

Let us help you narrow your choices
Merrill Guided Investing -Footnote 1 Get a professionally managed portfolio aligned to your goals that's built, monitored and rebalanced by Merrill investment professionals.
Merrill Edge MarketPro®
Use this powerful market analysis and trading tool to monitor your portfolio in real time, easily place trades and view interactive charts on a customizable dashboard.
Fixed Income Screener
You can filter a vast universe of bonds and CDs based on specific criteria you choose and adjust.
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You can learn about all of the investments we offer based on your level of experience, topic, or the resource format in the Investor Education learning center.
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An investment advisory program that combines the best features of online investing with a professionally managed portfolio.Footnote 1
The Chief Investment Office (CIO) develops the investment strategies for Merrill Guided Investing and Merrill Guided Investing with Advisor, including providing its recommendations of ETFs, mutual funds and related asset allocations. Managed Account Advisors LLC (MAA), Merrill's affiliate, is the overlay portfolio manager responsible for implementing the Merrill Guided Investing strategies for client accounts, including facilitating the purchase & sale of ETFs and mutual funds in client accounts and updating account asset allocations when the CIO's recommendations change while also implementing any applicable individual client or firm restriction(s).

You may also be able to obtain the same or similar services or types of investments through other programs and services, both investment advisory and brokerage, offered by Merrill; these may be available at lower or higher fees than charged by the Program. The services that you receive by investing through Merrill Guided Investing or Merrill Guided Investing with Advisor will be different from the services you receive through other programs. You may also be able to obtain some or all of these types of services from other firms, and if they are available, the fees associated with them may be lower or higher than the fees we charge.
Merrill Guided Investing and Merrill Guided Investing with Advisor have an annual program fee of 0.45% and 0.85%, respectively, based on the assets held in the account. This fee is charged monthly in advance. In addition to the annual program fee, the expenses of the investments will vary based on the specific funds within each portfolio. Actual fund expenses will vary; please refer to each fund's prospectus. To learn more about pricing, visit the Merrill Guided Investing Program Brochure (PDF) or the Merrill Guided Investing with Advisor Program Brochure (PDF).