Difference between revisions of "Fixed income"

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(Created page with "{{Main|Debt security}} '''Fixed income''' is a term used to describe a type of Financial security that promises to pay fixed sums of cash in the future.<ref name="BM35">B...")
 
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{{Main|Debt security}}
 
{{Main|Debt security}}
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'''Fixed income''' is a term used to describe a type of [[Financial security | financial security]] that promises to pay fixed sums of cash in the future.<ref name="BM35">Bodie, Merton, 2000, p. 35</ref>
  
'''Fixed income''' is a term used to describe a type of [[Financial security]] that promises to pay fixed sums of cash in the future.<ref name="BM35">Bodie, Merton, 2000, p. 35</ref>
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The Bogleheads forum does ''not'' have a consensus on the role of ''fixed income'' in a portfolio. Fixed income:
  
Some Bogleheads consider the main asset allocation decision as the proportions of equities (stocks) and '''fixed income''' to hold in the investment portfolio, then further divide ''fixed income'' into bonds and cash.  
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*contains proportions of equities (stocks) and ''fixed income''; where ''fixed income'' consists of bonds and cash.
  
Other Bogleheads don't use the term ''fixed income'' at all. Some simply consider the top-level asset allocation decision as the proportions of stocks, bonds and cash to hold. Others simply refer to their top-level asset allocation decision as ''stocks vs. bonds''; cash may be considered as "savings", and not included in the investment portfolio.  
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Or,
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*contains proportions of equities (stocks) and ''fixed income''; where ''fixed income'' consists of bonds and cash. Additionally, defined benefits (pension) can be considered as bonds.<ref>[http://www.bogleheads.org/forum/viewtopic.php?f=10&t=97372 Defined Benefits Pension as fixed income?], forum discussion.</ref>
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Or,
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*contains stocks, bonds, and cash. ''Fixed income'' is not used in this context.
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Or,
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*is not defined. Portfolios consist solely of ''stocks and bonds.'' Cash is considered as "savings" and not included in the portfolio at all.
  
 
Even finance academics are inconsistent in their use of the term ''fixed income'', but there seems to be consistency in the use of the term ''debt security'' to describe all debt instruments, both short and long term.
 
Even finance academics are inconsistent in their use of the term ''fixed income'', but there seems to be consistency in the use of the term ''debt security'' to describe all debt instruments, both short and long term.
  
Because of the ambiguity of whether or not ''fixed income'' includes money market securities, ''fixed income'' is discussed in the main article, [[Debt security]].
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Because of inconsistent usage, specifically the ambiguity as to whether or not ''fixed income'' includes money market securities; ''fixed income'' is discussed in [[Debt security]].
  
==Notes==
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==See also==
<references/>
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*[[Debt security]]
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*[[Financial security]]
  
 
==References==
 
==References==
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{{Reflist}}
  
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==Bibliography==
 
*Bodie, Merton (2000). ''Finance''. Prentice-Hall. ISBN 978-0133108972
 
*Bodie, Merton (2000). ''Finance''. Prentice-Hall. ISBN 978-0133108972
  
{{Footer}}
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{{Financial theory}}
[[Category:Financial Theory]]
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[[Category:Financial theory]]
[[Category:Investing]]
 
[[Category:Asset Classes]]
 

Latest revision as of 20:41, 11 May 2018

Fixed income is a term used to describe a type of financial security that promises to pay fixed sums of cash in the future.[1]

The Bogleheads forum does not have a consensus on the role of fixed income in a portfolio. Fixed income:

  • contains proportions of equities (stocks) and fixed income; where fixed income consists of bonds and cash.

Or,

  • contains proportions of equities (stocks) and fixed income; where fixed income consists of bonds and cash. Additionally, defined benefits (pension) can be considered as bonds.[2]

Or,

  • contains stocks, bonds, and cash. Fixed income is not used in this context.

Or,

  • is not defined. Portfolios consist solely of stocks and bonds. Cash is considered as "savings" and not included in the portfolio at all.

Even finance academics are inconsistent in their use of the term fixed income, but there seems to be consistency in the use of the term debt security to describe all debt instruments, both short and long term.

Because of inconsistent usage, specifically the ambiguity as to whether or not fixed income includes money market securities; fixed income is discussed in Debt security.

See also

References

  1. Bodie, Merton, 2000, p. 35
  2. Defined Benefits Pension as fixed income?, forum discussion.

Bibliography