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Fixed Investment Definition and Quiz

There are few guarantees in life, but fixed investments hope to be just that, certainty and no loss of principal.
  1. Define - Define Fixed Investment.
  2. Context - Use Fixed Investment in a sentence.
  3. Quiz - Test yourself.
face pic by Paul Alan Davis, CFA
Updated: February 17, 2021
Using this distinction, many fixed income investments do not qualify. Read more below.

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Understanding fixed investments


Fixed Investment is an investment with a fixed or stated return in the form of interest as with a CD, bank savings account or a guaranteed investment contract. Fixed investments typically do not incur losses in principal.

Synonym: interest-only investment

For context, many presume bonds fall under the definition of fixed investment without realizing that bonds can suffer principal losses, particularly when interest rates rise. For nearly four decades interest rates have been on a downward trajectory, so investors lose sight of the fact that bonds in fact historically come with more risk than investors have experienced. This potential for loss of principal is the distinction between fixed investments and fixed and variable investments. It's a subtle distinction, but an important one.

In a Sentence

Doc:  A fixed investment is suitable for people or institutions seeking stability of principal.
Lia:  Will you explain why some in 2016 accepted negative interest rates? Isn't that a loss of principal?


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Typically, because fixed investments offer lower risk, they also historically offer lower return. | True or False?


Which of the following could be considered a fixed investment? | Money Market or Treasury Note or Zero-Coupon Bond?

Money Market

Questions or Comments?

Still unclear on the Fixed Investments? Check out our series on financial modeling in Excel called Quant 101.

Related Terms

Our trained humans found other terms in the category security types you may find helpful.

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/ factorpad.com / fin / glossary / fixed-investment.html

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