Fixed Income

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A fixed income is one in which earnings remain constant and do not fluctuate in relation to the current price levels in the economy. When the gain or yield of an investment has a more or less uniform rate of income or return every year, it is said to have a fixed income. Bonds, money market instruments, annuities, and preferred stocks all pay a specific interest rate or dividend and are examples of fixed income investments. People living on a fixed income have a difficult time when prices rise; an example is a retired person living off of a pension in a period of inflation.