What are the Disadvantages of Fixed Income Investments?

[Suba]

Fixed income investments where investors will receive a fixed income until maturity, fixed income can be in the form of interest, rent, etc. This fixed income is usually not affected by economic changes because this fixed income has stated how much interest rate investors can receive, some examples of fixed income investments such as fixed income mutual funds, securities, bank deposits, etc. Some of the advantages of fixed income investments that I know are:
If you like interest rates to rise, we will still receive interest according to the agreement. What do you think?

 

[pousinha]

The disadvantage happens when the same financial product is sold at a very much higher interest, compared with the one you purchased in the past (in the European and South American countries it especially happens during high inflation periods). In such a case, for ex., in 2019 you purchased a Federal Treasury whose deadline is (for ex.) in 2035 at an annual interest of the 4% and in 2023 the same Treasury faces an interest of the 7%. If meanwhile the inflation reached the 5,5%, the interests you are currently earning are lower than inflation. Result: loss of spending power. But that's the investments world: the zero risk rate simply doesn't exists, even in the case of conservative investments.

 

[Augusta]

There's no change in interest whether the investment is doing great or not. You get a fixed interest

 

[Suba]

Liquidity risk often occurs when most investors liquidate their investment instruments, and investment managers often lack cash so they have to postpone.

 

[Springtime]

There are pros and cons of fixed income investments. The disadvantage I can think of is the return is usually lower than stocks.

 

[pousinha]

The disadvantage I can think of is the return is usually lower than stocks.

Not in my country: it's since 2019 our stocks keep on plummeting, plummeting and plummeting and it looks like there's no return. In any way, we must consider how Latin America is unsteady from every standpoint.