Call Us Now
01675 469085
Call Us Now
01675 469085
Fixed interest investments is the term used to describe Government and Corporate bonds (which should not be confused with ‘investment bonds’ which are a kind of life insurance policy).
These kinds of bonds are loans to governments or companies that guarantee to pay the bondholder a specified level of income (called the ‘coupon’) for a specified period of time. At the end of that time, the bond issuer will repay the capital loaned.
Fixed-interest securities can form an important part in diversified investments and investment strategies by:
The risk of fixed-interest investments is that the bond issuer defaults on either the interest payments or the repayment of capital. Historically speaking fixed interest investments have not provided the same levels of return as equity investments, but the risk to an investor’s capital is generally lower.
As a rule of thumb, the rate of interest offered increases with the risk of the issuer defaulting.
Generally speaking, fixed-interest investments are divided into 3 groups:
Most governments issue bonds. UK government bonds are called Gilt Edged Stock or "Gilts" and are considered to be some of the lowest-risk investments. Generally speaking, bonds issued by governments represent a lower risk than bonds issued by companies. Consequently, the interest paid by governments tends to be lower than that paid by companies. It must be remembered that one needs to consider the individual government issuing the bonds, as some governments have defaulted on these types of securities or are at risk of defaulting.
These are bonds issued by companies with good financial strength and credit ratings. While generally considered to be riskier than Gilts, they are still low risk compared to investing in equities or commercial property. The rate of interest on these kinds of bonds will normally be higher than that paid on Gilts, but lower than that paid on ‘Sub-Investment Grade Bonds‘.
It should be noted that ‘Investment grade bonds’ can become ‘sub-investment grade bonds’ – at the time of issue the company may have been understood to be on a firm footing but during the term of the bond they may lose their credit.
These are also known as ‘High-Yield Bonds’ or even ‘Junk Bonds’.
These bonds are higher risk than Gilts or Investment grade bonds and tend to pay greater rates of interest. They will normally be slightly lower risk than equities, but will normally be used to provide opportunities for growth and income in a portfolio rather than to provide some capital security.
The amount of risk will depend on the individual company issuing the bond. Companies that are considered to be at a greater risk of default, need to pay a greater rate of interest to attract people willing to lend them money, thus the rule of thumb is that the greater the risk of default, the greater the rate of interest, or ‘yield’ (and vice versa). This gives rise to the common term of ‘high-yield bonds’.
The term ‘junk bonds’ can be used to describe any ‘sub-investment bond’, but is most commonly reserved for bonds of those companies who are already, or are in imminent danger of, defaulting or having to restructure the company and/or debt.
All fixed-interest securities can be traded on stock markets. They may be sold on these markets at a value that differs from the issuer's value. If an issuer of bonds has become more attractive (e.g. the company’s fortunes have improved and/or the rest of the market is considered to be riskier than before) then you may be able to sell the bonds for more than their face value. Alternatively, if the issuer has become less attractive (e.g. the issuer is in financial difficulties) then the value of the bond would be less than the face value (assuming a buyer can be found).
Read lessI have always found pensions to be very confusing. David Knight however has made things a lot clearer he explains things thoroughly and now provides me with expert professional pensions advice. I have been very happy with the service provided. Communication is very good, he is approachable and I feel in safe hands
Kevin has been dealing with my finances for a number of years now, I have always found him honest and trustworthy and true to his word. He has helped me greatly with my pensions and continues to do so. I would freely recommend Kevin's services, and often do so to my clients and friends and family
Kevin has been my financial adviser for almost 12 years. I trust him implicitly. He has always guided me through the various investment options . Whilst he has been mindful of my reluctance to take risks financially he has encouraged me to take measured steps in order to maximise my savings. His advice and guidance has proved to be very advantageous. At our meetings he has always been well prepared and willing to answer my questions .
My business partner and I were looking for solid Financial advice on future pension and Property investments. Kevin has managed our situation exceptionally and has always been willing to give good advice. He has always been able to explain the investment process to us so that we understand it and know what the pros and cons are with each investment. With regards to the current financial climate we have had to chop and change the way in which we have looked at our investment and Kevin has played a crucial role in helping us reach the most sensible and essentially profitable solution.
Knight Parker have provided me with expert financial advice in respect of my pensions for three years. They are knowledgeable, information is timely and they have enabled me to make very good investment decisions.
My husband and I recently decided to retire and therefore needed to get expert advice regarding our pensions. We found that Dave was very friendly and offered a very professional service. His advice was so easy to understand and took away the complicated wording that you often come across when dealing with pensions. Hence our pensions were dealt with, without any effort on our part. Would definitely recommend David Knight
I am extremely happy with the service I receive from David. He presents things in a detailed but understandable way and is always on hand to to answer my questions and queries.
REQUEST A CALL BACK
NEWSLETTER
CONTACT US
Knight Parker Wealth Management LLP
Wynn House
60 High Street
Coleshill
Birmingham, UK.
B46 1AZ
T: 01675 469085
Email Us
Knight Parker Wealth Management LLP is registered in England and Wales, Company Number: OC385181. Registered Address: Wynn House 60 High Street, Coleshill, Birmingham, England, B46 1AZ.
Knight Parker Wealth Management LLP is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited which are authorised and regulated by the Financial Conduct Authority.
The guidance and/or information contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.
Approver Quilter Financial Services Limited and Quilter Mortgage Planning Limited 02/10/2024.
© Copyright 2025 - Adviser Pro - All Rights Reserved
Design and Developed by Adviser Pro © 2025