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Introducing Fixed Income Portfolios

2 MIN READ17 FEB 2023

Compound can help you build an income-generating fixed income portfolio. This is part of our broader asset management offering.

In fixed income investments, the investor lends money to a borrower — typically a corporation or government. In exchange, the lender receives interest payments over a set period of time. The value of fixed income investments typically fluctuates less than the value of stocks, so including fixed income in a portfolio can reduce your overall volatility while generating income. And because the income paid by fixed income securities is linked to interest rates, they can be an especially attractive alternative to stocks when interest rates are high.

So a fixed-income portfolio can be an effective way to generate income payments and to preserve your wealth during high stock market volatility or inflation.

But as an individual investor, investing in fixed income alone can be a headache. Different types of fixed income securities can be difficult to understand — should I invest in 5-year Kansas municipal bonds funding road construction, or a 30-year US government bond? If inflation is high and interest rates are rising, should I look for short- or long-term bonds? And building a portfolio diversified with dozens of securities is a full-time job.

When working with Compound, you and your financial advisor will co-design your portfolio and choose investments so that you have the best chance of achieving your broader financial goals — so you’re not investing in a silo.

  1. You and your advisor discuss your financial goals, and agree on an investment strategy that helps you achieve them.
  2. Your advisor proposes an asset allocation plan that best supports your investment strategy. Your asset allocation includes a mix of asset types, like public equities, bonds, real estate investments, and venture capital investments.
  3. Based on your asset allocation, you and your advisor design a fixed income portfolio including the types of bonds (e.g. municipal bonds or higher-yielding corporate bonds with different payment timelines) and how much to allocate to each.
  4. Compound’s investment managers purchase bonds to build your portfolio and monitor it over time. You and your advisor check-in regularly and make changes to your investment so that you’re on-track to your financial goals.

And because your portfolio is managed by Compound, your Compound tax advisor is also in the loop. So whether you need to design your portfolio around your tax profile or properly capture the tax benefits of your investments, your tax team is also ready to help.

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