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 taxes
  • CDs: Certificates of deposits (CDs) are usually issued by commercial banks and insured by the FDIC
 
Play video: Bond investing
 
Bond investing
Where do bonds fit in your portfolio? This tutorial will introduce you to different types of bonds and explore their potential benefits and risks.
Go to the Merrill Edge Classroom powered by Morningstar
 
Merrill Edge Investing
Classroom
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.—Yago Gonzalez, senior portfolio manager, Global Wealth & Investment Management Chief Investment Office (GWIM CIO) Due Diligence.
Play video: Asset allocation and your portfolio
 
Asset allocation and
your portfolio1 (1:48)
When deciding how to allocate your money among different investments, be sure to consider your goals, investment experience, time frame, liquidity needs and your comfort level with risk.
 
Play video: Why bonds still matter
 
The vital role bonds
play in a diversified
portfolio (10:35)
Learn more about the importance of fixed income investments within your overall investment strategy with this.
 
How to Build a Portfolio
 
How to build a portfolio
  • Consider your time horizon and comfort level with investment risk when choosing the proper asset allocation
  • Select diversified investments that align to your goals
  • Monitor your investments to help keep your portfolio on track
>
 
Go to the Merrill Edge Classroom powered by Morningstar
 
Merrill Edge Investing
Classroom
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 Edge 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:
 
View a list of fixed income definitions
 
Fixed income definitions
View fixed income definitions from our Glossary:
  • Bond equivalent yield
  • Callable bond
  • Par value
  • Yield to maturity
 
Go to the Merrill Edge Classroom powered by Morningstar
 
Merrill Edge Investing
Classroom
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 and time horizon
 
 
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
 
 
Visit investinginbonds.com by the Securities Industry and Financial Markets Association (SIFMA)
 
 
Get price, ratings and earnings alertsPlease login to view content
 
 
View your Watchlist and alerts on the Merrill Edge mobile app
 
 

Related resources

Let us help you narrow your choices
Merrill Edge Select™ Portfolios are selected through a proprietary process that takes risk, cost and performance into account.
 
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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.
 
More you can do
 
 
Go to the Investor Education page
 
Investor education overview
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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1 Diversification and asset allocation do not ensure a profit or protect against loss in declining markets.

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