Difference between revisions of "Fixed income"

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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 | financial security]] that promises to pay fixed sums of cash in the future.<ref name="BM35">Bodie, Merton, 2000, p. 35</ref>
  
The Bogleheads forum does not have a concensus on the role of ''fixed income'' in a portfolio.
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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 portfolios to contain proportions of equities (stocks) and ''fixed income''; where ''fixed income'' consists of 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 consider portfolios to contain stocks, bonds, and cash. ''Fixed income'' not used in this definition.
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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>
  
*Still other Bogleheads refer to portfolios as ''stocks and bonds.'' Cash is considered as "savings" and not included in the portfolio at all.
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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 inconsistent usage, specifically the ambiguity as to whether or not ''fixed income'' includes money market securities; ''fixed income'' is discussed in [[Debt security]].
 
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]].
 
==References==
 
<references/>
 
  
 
==See also==
 
==See also==
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==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