Merrill A Bank of America Company Merrill A Bank of America Company Open an account Login Open Menu bar Find answers to common questions at MerrillSchedule an Open an accountwith Merrill What is fixed income?tab 1 of 3 selectedWhy invest in fixed income?tab 2 of 3Things to considertab 3 of 3 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. 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.Footnote1 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. If you're looking for more information, check out these responses to some of the common questions investors have about fixed income Expand all Bonds are issued by governments and corporations with the purpose of raising money. When you buy a bond, you're giving them a loan that they agree to pay back with interest. Bonds can have a variety of timelines for paying back interest, as well as a range of ratings from AAA (highest) to D (lowest) which reflect levels of risk. You can invest in individual fixed income (bond) securities, in fixed income mutual funds or ETFs, or a combination of these investing options. If you invest in mutual funds or ETFs, you're investing in a basket of many different fixed income investments (which can help provide exposure to various markets, sectors, maturities and credit qualities.) These funds are professionally managed, either actively or passively. Bonds can pay interest across a range of frequencies such as, monthly, quarterly, and at maturity, although semi-annual is the most common. Stocks give investors a share of ownership in a company. They come with more risk, but they typically offer the potential for higher returns. A bond represents the debt of the issuing entity, which could be a company, government or other organization. They typically offer a lower rate of return, but they can offer a way to generate regular income. A bond is a loan an investor makes to the bonds' issuer. When the bond matures, the issuer returns the full principal that was loaned. They also typically pay regular interest payments to investors. Discover more resources related to fixed income investments and enhance your investing knowledge. +Show moretopics Use Merrill's powerful investing tools to get actionable insights and find the best investments for you. Our expertise will help you find ideas, narrow down your options and help you understand individual investments at a glance. Learn moreabout Merrill investing tools Build foundational investing skills, learn to identify the right assets for your portfolio and discover tools to help you along the way. Stockseducation at MerrillETFseducation at MerrillMutual Fundseducation at MerrillOptionseducation at Merrill Open an accountwith Merrill 888.637.3343 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. Footnote1 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). Footnote2 Diversification, asset allocation and rebalancing do not ensure a profit or protect against loss. MAP6174746-06262025 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). Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp"). Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp. Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Investment products offered through MLPF&S and insurance and annuity products offered through MLLA: Privacy|Security|Glossary|Advertising practicespopupAdvertising Practicespopup © 2024 Bank of America Corporation. All rights reserved. 4326521
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