Categories: Investing Essentials

Fixed Income Trading

Fixed Income Trading is the trading of fixed income securities in the market. This segment includes instruments like government bonds, corporate bonds, and other similar securities. These securities are usually favoured by risk-averse investors and investors seeking risk free stable incomes.

As this segment includes mainly government bonds and similar securities, the returns are usually tax-free and the corpus received at the end of the maturity period may also have tax benefits. Fixed income trading although a huge market overseas is still at a very nascent stage in India.

The government is in the process of building infrastructure to boost fixed income trading. Some factors to be considered in fixed income trading include credit risk, reinvestment risk, interest rate risk, price risk, etc. The key advantages of fixed income trading are capital appreciation, tax benefits, steady income, and the safety of corpus.

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