What does "fixed-income security" mean?

A fixed-income security refers to an investment that provides fixed periodic payments. This means that the investor receives a predetermined amount of income at regular intervals, typically in the form of interest payments. These securities, such as bonds, have a set interest rate and maturity date, which makes them appealing to investors seeking predictable income and lower risk compared to equities.

This stability in income during the life of the investment contrasts sharply with other types of investments. For instance, investments that provide variable returns do not guarantee a specific amount at set times, while assets with no regular income generation do not provide periodic payments at all, and securities that offer equity ownership typically involve variable returns that depend on a company's performance rather than fixed interest rates. Hence, the defining feature of fixed-income securities is their provision of regular, predetermined payments.