Written by Ethan M. Stone
Most investors know about stocks, also called equity securities. Fewer understand fixed-rate investments such as bonds or CDs, and fewer still understand how these investments can create dependable income through retirement.
Fixed income investments can include such things as government and corporate bonds, annuities and certificates of deposits (usually called CDs). They are a category of investments that pay regular interest or dividend payments at a fixed interest rate (as compared to variable rate investments) over a set period of time. Fixed-interest investments can help diversify a portfolio and improve returns while managing overall risk of the portfolio. Each type of fixed-income investment has specific features that could benefit an investor based on their personal investment needs, goals and risk tolerance.
In this article, we aim to provide prospective investors with a brief overview of fixed-income investments, including the advantages and disadvantages of each type, and to share a little information how the fixed interest rate corporate bonds offered by Phoenix Energy work.
What are some different types of fixed-income investments?
Government Bonds are debt securities issued by a government to finance its spending. The bonds issued by a national government are considered among the safest investments because they are backed by the full faith and credit of the issuing government and the risk of default is considered low. One of the most popular government fixed-income investments is the U.S. Treasury bond. These debt securities offer regular interest payments with a promise to return the principal at maturity. They are widely used by more risk-averse investors looking for fixed and predictable returns, but as a result, pay significantly lower interest rates than other fixed-income investments, particularly corporate bonds.Corporate bonds are among the largest components of the U.S. bond market. They are a type of debt security usually structured to deliver interest payments during the bond's term (or life), with principal repaid at maturity. Corporate bonds are issued by companies to raise capital for business activities, including expansion and development. They operate similarly to government bonds, except they generally offer higher interest rates to compensate for the increased risk of lending to a corporation as compared to a government. The risk level of corporate bonds can vary based on the issuing company’s financial health, but prospective investors can review the company’s financials and applicable offering documents to assess the financial ability of the issuing company and to meet its debt obligations.
Certificates of deposit (CDs) are time deposits offered by banks and credit unions that usually pay a fixed interest rate for a specified term. They are usually sold in maturities ranging from 28 days to 5 years, and withdrawing (or redeeming) before the maturity date typically involves paying some kind of penalty or redemption fee. They are considered very safe in terms of risk of default, as they are usually insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain limit (i.e., $250,000); however, they are subject to other risks, including interest rate and inflationary risks (as the interest rate is lower and could be outpaced by inflation) and are often purchased by conservative investors who want to lock in a fixed rate of return for a set period.
Annuities are often considered one of the more complicated fixed-income instruments available to investors. In its simplest form, an annuity is a contract between an investor and an insurance company and requires the issuer to make regular payments for more than one year. However, annuities come in many forms, including fixed, variable, and indexed, and can be purchased with a single payment or a series of payments (called premiums). Understanding the fees, expenses, charges, and features of an annuity can be complicated, and understanding the tax implications is imperative for any investor to understand before purchasing an annuity. Like any investment, whether an annuity is right for an investor depends on the investor’s financial situation, age, health, and goals. Annuities can be right for some investors and wrong for others.
What are some of the advantages of fixed-income investments?
Fixed-income investments are considered to have several advantages for investors, depending on the needs of the particular investor, including:- Providing potential for a steady income stream at a fixed rate of return during the term of the investment, compared to unknown returns associated with equity-based investments.
- Generally less volatile than equity investments, such as stocks, though some may not be suitable for investors seeking capital preservation, as all investments carry risk and may fluctuate in value.
- May have an increased chance of recovering a portion of their investment in the event of default as compared to equity investments.
- Some are considered very safe and without default risk, including government bonds and FDIC-insured CDs; however, the reduced default risk comes with significantly lower interest rates than those offered by corporate bonds.
What are some of the disadvantages of fixed-income investments?
Fixed-income investments are considered to have several disadvantages for investors as compared to other types of investments, including:- Returns are often lower than equity-based investments on a historical basis measured over time (but this is a trade-off for less risk).
- An increased credit and default exposure, depending on the issuer of the debt security.
- Interest rate risk if interest rates rise during the term of the fixed income security and the investor misses out on getting a higher return for a period of time.
- Inflationary risk as the rate of inflation eats into the returns the investor would otherwise receive.
How do Phoenix Energy’s fixed-income corporate bonds work?
Phoenix Energy is an oil and gas company focused on drilling operations in the Williston Basin. Phoenix Energy Bonds offer fixed interest rates ranging from 9 to 13% and with maturities from one to eleven years, depending on the particular bond offering. For years, Phoenix Energy has offered its corporate bonds to “accredited investors” by way of private placements under Regulation D of the Securities Act of 1933, as amended. More recently, Phoenix Energy has begun offering bonds to accredited and non-accredited investors through an offering registered with the Securities and Exchange Commission that is available in all 50 U.S. states.While the higher interest rates offered by Phoenix Energy Bonds are intended to compensate investors for the increased credit risk of the bonds being offered by Phoenix Energy, it is important to understand why Phoenix Energy is able to offer such high interest rates. Simply put, it is because of the nature of the oil and gas properties in which Phoenix Energy is investing, which provide rates of return for Phoenix Energy that are more than sufficient to allow Phoenix Energy to pay the higher interest rates to investors on the Phoenix Energy Bonds.
To learn more about Phoenix Energy Bonds, sign up for a live webinar, watch one of the on-demand videos, or contact a member of the Investor Relations Team. It is never too late to start your investment journey.
DISCLAIMER
The information contained in this article is meant for general informational purposes only. While Phoenix Energy One, LLC (together with its affiliates, "Phoenix") makes every effort to ensure the accuracy and currency of the information presented, it cannot guarantee it. Phoenix does not provide legal or financial advice and the information contained herein should not be considered a replacement for obtaining professional advice. Any reliance on the information contained herein is done at your own risk. Phoenix disclaims any liability for loss or damage, including indirect or consequential loss or damage, arising from or related to the use of the information in this article or the reliance upon the information presented.
Phoenix Energy One, LLC (“Phoenix”) is conducting offerings of debt securities pursuant to (i) an exemption from registration provided by Rule 506(c) of Regulation D (the “Private Placement Offerings”) of the Securities Act of 1933, as amended (the “Act”) and (ii) an effective registration statement on Form S-1 under the Act (including a prospectus) filed with the Securities and Exchange Commission (the “SEC”) (the “Registered Offering”). The debt securities are offered through Dalmore Group, LLC, a member of FINRA/ SIPC (finra.org/sipic.org), who is not affiliated with Phoenix although certain non-executive personnel of Phoenix are registered representatives of Dalmore. Only “accredited investors”, as such term is defined in Rule 501 of Regulation D of the Act, may invest in the Private Placement Offerings. Participation in any of the offerings is subject to certain criteria, including meeting financial suitability requirements. Before investing, investors should read all of the offering documentation for the relevant offering, including, the prospectus for the Registered Offering, and all documents Phoenix has filed with the SEC, which you may get for free by visiting EDGAR on the SEC’s website at sec.gov. Alternatively, Phoenix or Dalmore will arrange to send you any applicable offering documents you request at phxoffering.com. The securities offered are speculative, unsecured, illiquid, and you may lose some or all of your investment. Past performance is not indicative of future results. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, and shall not constitute an offer, solicitation, or sale of any security, in any jurisdiction in which such offering, solicitation, or sale would be unlawful.
- Note: These same investments can also be variable rate and not fixed.
- https://www.sec.gov/files/ib_corporatebonds.pdf
- As of April 06 2026, Phoenix Energy has not missed an interest payment or been unable to return the principal of a bond at maturity or upon early redemption by the bondholder. Past performance is not a guarantee of future performance for fixed-income.
