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Fixed Income & Bonds Education

Learn about fixed income investments like bonds, CDs and others

Understand the basics of fixed income securities

What is fixed income?

Fixed income refers to investment securities that pay investors fixed interest payments until the maturity date. The most commonly known fixed income investments are government and corporate bonds, but CDs and money market funds are also types of fixed income.

What are the different types of fixed income products I can invest in?


Treasury bonds are government debt securities issued by the U.S. federal government that have maturities from between a few days and 30 years. They earn periodic interest until maturity and are generally exempt from state and local taxes.


A municipal bond is a fixed income security issued by a municipality. Interest income is generally exempt from federal and state taxes, but capital gains distributed are taxable to the investor.Footnote 1


A corporate bond is any bond issued by a corporation for investors to purchase. They're issued in blocks of $1,000 and are a major source of financing in the private sector. Corporate bonds are fully taxable.


Agency bonds are government securities issued by entities other than the U.S. Treasury that have a maturity of no more than 30 years. Generally, they are subject to federal and state tax.


A certificate of deposit (CD) is a bank-issued deposit instrument with a set maturity and interest rate. Maturities range from a few weeks to several years.

Common questions about fixed income

If you're looking for more information, check out these responses to some of the common questions investors have about fixed income

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Investing involves risk including the possible loss of principal investment.

Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa.

Footnote 1 Income from investing in municipal bonds is generally exempt from federal and state taxes for residents of the issuing state. While the interest income is generally tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the federal alternative minimum tax (AMT).

Footnote 2 Diversification, asset allocation and rebalancing do not ensure a profit or protect against loss.

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

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