Fixed Income refers to a category of investments that provide investors with regular and predictable returns in the form of fixed interest payments and the return of principal upon maturity. These instruments are typically less volatile than equities and are preferred by conservative investors seeking stability and steady income rather than high-risk, high-return opportunities.

The most common types of fixed income securities include bonds, debentures, treasury bills, government securities (G-secs), and fixed deposits. In these investments, an investor essentially lends money to an issuer ó such as a government, corporation, or financial institution ó in exchange for periodic interest payments (called coupons) and repayment of the invested principal at the end of the term.

Key features of fixed income instruments include predictable cash flows, defined maturity dates, and relatively lower risk compared to equities. The interest rate, also known as the coupon rate, remains constant throughout the life of the security in most cases, making it easier for investors to plan their income. However, fixed income investments are still subject to certain risks, such as interest rate risk (the possibility that rising rates will reduce bond prices) and credit risk (the risk of issuer default).

Investors use fixed income securities to diversify portfolios and protect against market volatility. For instance, when equity markets are uncertain, fixed income products often act as a cushion, preserving capital and ensuring consistent income flow. Institutional investors, pension funds, and retirees commonly allocate a portion of their portfolios to fixed income to maintain financial stability.

In India, fixed income investments are regulated by authorities such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). These instruments play a vital role in balancing an investorís portfolio by offering stability, liquidity, and predictable returns in the broader financial system.