A managing member at Silver Birch Companies, Daniel “Dan” E. Klausner assists clients in Carmel and Indianapolis, Indiana. Dan Klausner is experienced in include investment banking and fixed income investing.

Fixed income investing differs from stocks in several ways. The assets that generate the income, like bonds, perform best during adverse economic conditions. During this same timeframe, stocks perform poorly. Fixed income sources also generally present less risk than buying stocks because buyers receive a yield from their purchased assets on a set schedule.

Fixed income investing possesses unique benefits when compared to investing in stocks. If saving for retirement, buying bonds can help you build up a more stable income. Workers close to retirement can also use bonds to help them transition from receiving a salary to receiving income from other sources. Professionals who want to preserve their capital can also benefit from fixed income investing by compensating for losses incurred in stocks.

The three primary risks associated with fixed income investing pertain to changing market conditions and the state of buyers and sellers of bonds. If inflation occurs or interest rates rise, the purchasing power of the bond will decrease. The value of the bond can also decrease if no buyers exist for the bond or if the issuer of the bond goes out of business. In both cases, the investor cannot receive the yield attached to it.