Best Fixed Income Investments in 2024

When it comes to fixed-income investing, you don’t have to settle for investments that generate minuscule returns. The best fixed-income investments can offer predictable, fixed returns, ensuring your money works for you within reasonable levels of risk.

Here’s what you need to know about the different types of fixed-income investments available, how they work, and how to get started.

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Best fixed-income investment vehicles

When starting with any type of investing, it helps to know your options. Here are the most common fixed-income investments available today:

Bond funds

As the name implies, a bond fund is an investment fund that invests mainly in different types of bonds, including municipal, corporate, and government bonds, as well as other fixed-income securities. Bond funds can include mutual funds and exchange-traded funds (ETFs).

Municipal bonds

Municipal bonds are debt obligations issued by public entities (counties, cities, states) to fund public projects such as schools, roads, prisons, etc. Municipal or “muni” bonds, as they are commonly called, pay investors interest, usually twice a year.

High-yield bonds

High-yield bonds are issued by corporations to raise capital. These bonds offer higher yields due to the issuing corporations’ lower credit ratings. This makes them riskier than most other bonds and more prone to default. High-yield bonds are also referred to as junk bonds.

Money market fund

A money market fund is a type of fund that holds short-term, low-risk investments. These types of funds invest in securities such as Treasuries and high-quality bonds with shorter maturity dates. With money market funds, your money isn’t tied up for years yet still earns a decent return.

Preferred stock

Preferred stocks are often considered a hybrid between common stock and bonds. This is because they offer a set, fixed return like a bond but hold equity. However, their “preferred” stock status means that preferred shareholders have first dibs when it comes to receiving dividends or divvying up company assets, should the company go under.

Corporate bonds

A corporate bond is a debt obligation issued by a corporation to raise capital. Like other bonds, investors can expect regular interest payments, and the principal is returned at maturity.

Certificates of deposit

A certificate of deposit (CD) is a savings account where investors agree to keep their money deposited with a bank or credit union for a specified amount of time (somewhere between three months and five years) in exchange for earning an agreed-upon interest rate. There is typically a penalty for pulling money out of a CD before the maturity date.

Treasury securities

Treasury securities are debt obligations you buy from the U.S. government. They’re considered safe and stable investments since they’re backed by the government. Treasury bills, notes, and bonds are three types of Treasury securities.

Treasury bills

A Treasury bill, also called a T-bill, is a short-term investment issued by the federal government. They’re issued for less than a year and typically offer lower returns than stocks, bonds, or other treasury securities. Interest earned is only paid at maturity. They’re highly liquid, which means they can be sold quickly if you need your money for other purposes.

Treasury notes

Treasury notes pay a fixed interest rate every six months. Investors can hold the note until maturity or sell it at any time. These fixed-income investments are very liquid and offer a higher rate of return than a T-bill but a lower rate than a T-bond. They’re sold in increments of two, three, five, seven, or 10 years. You can purchase Treasury notes at auction directly from the federal government or on the secondary market.

Treasury bonds

Treasury bonds, also called T-bonds, are longer-term investments (think 20 or 30 years) with the highest yield among Treasury securities. The interest rate is fixed, and interest is paid every six months. It’s possible to earn more than the interest rate on the bond if you purchased it below the face value on the secondary market.

Treasury inflation-protected securities

Treasury inflation-protected securities (TIPS) are investments that adjust the principal and interest payments for inflation. You can buy this type of investment in five, 10- or 30-year terms in $100 increments. Interest payments are made every six months. Principal and interest payments are adjusted based on the Consumer Price Index for Urban Consumers (CPI-U).

Best fixed-income funds to invest in now

If you’re considering investing in fixed-income funds, you’re probably interested in what bond funds are performing well right now. While it is constantly changing, here is a sampling of funds from Morningstar’s list of the best bond funds in 2024:

  • American Funds Bond Fund of America (ABNDX)
  • Baird Core Plus Bond (BCOSX)
  • BlackRock High Yield Bond (BHYIX)
  • Fidelity Investment Grade Bond (FBNDX)
  • iShares Core Total USD Bond Market ETF (IUSB)
  • JPMorgan Limited Duration Bond ETF (JPLD)
  • PGIM Short-Term Corporate Bond (PSTQX)
  • Pimco Diversified Income (PDIIX)
  • Schwab Short-Term U.S. Treasury ETF (SCHO)
  • Vanguard Long-Term Corporate Bond Index/ETF (VBLLX) mutual fund (VCLT) ETF

Remember that as with equity investments, past performance is not an indicator of future returns, and fixed-income funds like the ones listed above are not guaranteed.

How to pick the best fixed-income investment vehicle

As you can see, there is a wide variety of fixed-income investments you can choose from. If you find the choices overwhelming, we recommend contacting a financial advisor or financial planner to help you decide. There is no shortage of advisors to choose from, such as JP Morgan Personal Advisor. You may also be able to locate an advisor through Empower or SmartAsset.

Alternatives to fixed-income investing

Fixed-income investments are typically part of a diversified portfolio. If you’re looking for alternatives, here are other investments to consider:

Fixed-income investments vs. equity (stock)

Equity investments, such as stock, generally have the potential to earn higher returns than fixed-income investments. But they also come with higher risk. This is why many investors diversify their portfolios with both fixed-income and equity investments.

Fixed income vs. banking accounts

While not considered fixed-income investments, some bank accounts pay interest. These include savings accounts, high-yield savings accounts, checking accounts, and cash management accounts.

Fixed income vs. real estate

Real estate investments are less liquid than most fixed-income investments but have the potential for a greater upside and risk. Even with adequate management, real estate is a much more active investment than fixed-income.

Fixed income vs. fixed annuities

A fixed annuity is purchased from an insurance company and guarantees a set amount of interest paid, no matter what happens in the stock market. Your original investment, however, is not very accessible, and annuities can charge high fees.

Fixed income vs. REITs

A real estate investment trust (REIT) invests in a portfolio of real estate assets and trades like a stock. There are many different types of REITs, and unlike direct ownership of a rental or commercial real estate property, investors aren’t involved in the active management of the properties.

Fixed income vs. dividend stocks

Dividend stocks pay a portion of the company’s profits to investors. They offer regular income to investors, but in general, are more risky than fixed-income investments.

More about fixed-income investing

Here’s more information about fixed-income investing and how it works.

What is fixed-income investing?

Fixed-income investments typically pay out returns in the form of dividends or interest. They can help diversify your investment portfolio, preserve capital, and provide a steady income stream. Bonds are a good example of a fixed-income investment.

How does it work?

The most common fixed-income investments are straightforward in how they earn returns. A CD, for example, will offer a set interest rate for a specified amount of time. Many fixed-income investments are less risky than stocks, but they also tend to offer lower returns.

Pros and cons


  • Lower risk than equity investments
  • Many offer fixed-interest rates and guaranteed returns
  • Some fixed-income investments offer tax advantages
  • Can help diversify your portfolio


  • Lower risk can mean lower returns than other investments
  • Some fixed-income investments have credit risk, which includes the possibility of default
  • Some fixed-income investments lack liquidity, such as a long-term CD
  • Potential for interest rate risk with some fixed-income investments, such as bonds

How to invest in fixed income

You can buy fixed-income investments through financial institutions, such as brokerage firms and banks. You can also buy them directly through issuers, such as the U.S. government.

Online brokerage

Many online brokers enable you to purchase fixed-income investments. A few brokerage options include Fidelity, TradeStation, and Public. Not all do, however. For example, you can’t purchase fixed-income, including bonds, through Robinhood.

Buy direct

Many fixed-income investments can be bought directly from the issuer. For example, you can buy Treasuries from the U.S. government’s website. If you want to buy a fixed-income annuity, you can buy it directly from an insurance company.


Many banks offer fixed-income investments, such as CDs and money market funds. You may need to purchase some of these investments in person, although many online banks allow you to purchase CDs on their websites.

Is fixed income the right investing strategy for you?

Fixed-income investments can help preserve your capital, diversify your portfolio, and generate income. You can also benefit from the tax advantages some fixed-income investments offer, such as municipal bonds.

Some fixed-income investments are also fairly liquid. So, if you plan on using the money within a few years, a fixed-income investment can provide stable growth while keeping your money secure.

TIME Stamp: Fixed-income investments can help build cash reserves

Fixed-income investments don’t have the highest potential for return, but their lower risk is an advantage. For money you’ll need within a few years, the best fixed-income investments can help you build your cash reserves while keeping it relatively safe.

Frequently asked questions (FAQs)

What is the safest investment with the highest return?

No investment is entirely risk-free. Higher returns usually involve higher risk. However, CDs, money market funds, government bonds, bond mutual funds and ETFs, and deferred fixed annuities, are all fixed-income investments that are considered less risky than stocks. In early 2024, U.S. Treasuries and some CDs offered yields in the 5% range.

What is the best way to invest in fixed income?

You can often invest in fixed-income investments through a brokerage account. Many banks also offer fixed-income investments, such as CDs. You can also invest directly in Treasuries via the U.S. government at

What is the safest fixed-income investment?

No investment has zero risk. Banks have failed in the past, and it’s possible the government can default on debt obligations like Treasuries, though this has never happened. Most experts consider Treasuries to be the safest fixed-income investments because they are backed by the government.

Which bond offers the highest return?

High-yield bond funds have the potential for the highest returns. But they also have the highest risk of defaulting.