Fixed-rate investments generally pay a stated rate of interest according to the terms of the investment and provide for the return of principal at a specified maturity date, subject to the issuer’s ability to meet its obligations. Common examples include certificates of deposit (CDs), U.S. Treasury bonds and notes, municipal bonds, and corporate bonds and notes.
Available interest rates vary over time, between products, and based on when you invest. They also depend on factors such as prevailing market interest rates, the issuer, the length of the investment term, and the issuer’s creditworthiness. Some corporate bonds may offer higher stated interest rates than government securities or bank deposits because investors are compensated for differences in credit quality and other investment characteristics
This guide explains how fixed-rate investments work, the factors that influence their yields, and the key differences among common fixed-income investments. It also discusses Phoenix Energy’s corporate bond and note offerings within that broader context.
The 30-Second Version
What is fixed-rate investing?
Fixed-rate investments generally pay a stated rate of interest according to the terms of the investment and typically provide for the return of principal at a specified maturity date, subject to the issuer’s ability to meet its obligations.
Current rates (mid-2026):
High-yield savings accounts and one-year CDs are near 4.2%, the 10-year U.S. Treasury is near 4.5%, investment-grade corporate bonds are near 5.1%, high-yield corporate bonds are near 6.9%, and Phoenix Energy’s current corporate bond offerings range from 9% to 13%, depending on the applicable offering and term.1
What affects interest rates?
Interest rates generally reflect several factors, including prevailing market rates, the investment’s maturity, liquidity, and the issuer’s creditworthiness.
Choosing among fixed-rate investments
Different fixed-income investments serve different purposes. Some investors prioritize preservation of capital and liquidity, while others may seek higher stated interest rates and are comfortable with different levels of credit quality, liquidity, investment term and risk.
Tax considerations
Interest from many fixed-income investments is generally taxable as ordinary income, although tax treatment varies by investment type and individual circumstances. Investors should consult their own tax advisor regarding the tax consequences of any investment.
What Do Fixed-Rate Investments Pay Right Now?
The table below provides a snapshot of select fixed-income investments and their approximate yields during mid-2026. These figures are provided for general informational purposes only.2 Because interest rates and market yields change over time, investors should verify current information before making an investment decision.
| Instrument | Typical Yield | Issuer / Protection | Source & Date |
|---|---|---|---|
| National average savings | ~0.38% | FDIC-insured bank | Bankrate, Jun 2026 |
| High-yield savings (top) | ~4.1–4.2% | FDIC-insured bank | Bankrate, Jun 2026 |
| 1-year CD (top) | ~4.15% | FDIC-insured bank | Bankrate, Jun 2026 |
| 5-year CD (top) | ~4.20% | FDIC-insured bank | Bankrate, Jun 2026 |
| Fixed annuities (multi-year guaranteed) | ~5–6.5% | Insurance company (backed by insurer's claims-paying ability; not FDIC insured) | Annuity.org, Jun 2026 |
| Money market fund (7-day) | ~3.45% | Investment fund (not FDIC insured) | Crane 100, Jun 26 2026 |
| 2-year U.S. Treasury | ~4.19% | U.S. government | FRED, Jun 26 2026 |
| 10-year U.S. Treasury | ~4.46% | U.S. government | FRED, Jun 26 2026 |
| I Bond (composite) | 4.26% | U.S. government | TreasuryDirect, May 2026 |
| Investment-grade corporates | ~5.1% | Corporate issuer | FRED, Jun 26, 2026 |
| High-yield corporates | ~6.9% | Corporate issuer | FRED, Jun 26, 2026 |
| Phoenix Energy bonds and notes | 6% to 13% | Phoenix Energy (corporate issuer) | Phoenix Energy, 2026 |
All figures are as of June 2026, unless otherwise indicated. The accuracy of stated figures is not independently verified.
Quick Tip
A higher stated interest rate does not necessarily make one investment better than another. Differences in yield often reflect differences in credit quality or insurer financial strength, liquidity, maturity, guarantees, and other investment characteristics.
Investor Insight
The table above provides a snapshot of representative yields at a point in time. Because interest rates and market conditions change, investors should verify current rates and consider how an investment may fit their financial objectives before making an investment decision.
How Does Fixed Income Actually Work?
Most fixed-income investments involve an investor providing capital to an issuer in exchange for periodic interest payments and the repayment of principal at a specified maturity date, subject to the terms of the investment and the issuer’s ability to meet its obligations.
For many fixed-income investments, several characteristics are especially important and are listed below in no particular order:
- Interest rate (coupon): The stated rate of interest paid under the terms of the investment.
- Term (maturity): The length of time until the investment reaches its maturity date.
- Issuer: The entity responsible for making interest payments and repaying principal.
- Credit Quality: A measure of the issuer’s financial strength and creditworthiness, which can influence the likelihood that it will meet its payment obligations.
For many fixed-rate investments, the stated interest rate is set when the investment is issued and is not tied to changes in market interest rates. Some fixed-rate investments, however, may provide for predetermined changes in the stated interest rate under the terms of the investment.
Before investing, prospective investors should review the applicable offering documents and evaluate the issuer’s financial condition, the investment’s terms, and the risks associated with the investment.
What Are the Main Types of Fixed-Rate Investments?
For purposes of this guide, fixed-rate investments can be grouped into four broad categories. Although each category may offer securities or contracts with stated interest rates or scheduled payments, they differ in the type of issuer, source of repayment, liquidity, tax treatment, and other investment characteristics.
Government Bonds and U.S. Treasuries
U.S. Treasury notes and bonds are debt securities issued by the federal government. Treasury securities are generally considered among the lowest-credit-risk, fixed-income investments because they are backed by the full faith and credit of the United States. As a result, they have historically offered lower stated interest rates than many corporate bonds. Historically, the United States has met its obligations on Treasury securities, contributing to their reputation as among the lowest-credit-risk fixed-income investments.
Interest earned on U.S. Treasury securities is generally exempt from state and local income taxes, although it remains subject to federal income tax.
Quick Tip
Because Treasury interest is generally exempt from state and local income tax, a Treasury security with a lower stated yield may produce a higher after-tax return than a taxable CD for some investors, depending on their tax situation.
Investor Insight
Government securities can help reduce portfolio risk and provide stability, but lower risk has historically been associated with lower expected returns. They may play an important role in capital preservation and diversification, although their returns may not keep pace with inflation over all periods.
Corporate Bonds
Corporate bonds are debt securities issued by companies to raise capital. Depending on the terms of the security, investors may receive periodic interest payments, with principal generally repaid at maturity.
Corporate bond yields vary based on factors including prevailing market interest rates, the issuer’s financial condition, the bond’s maturity, and other market considerations. Differences in yield generally reflect differences in the issuer, the terms of the bond, and other investment characteristics.
Phoenix Energy’s corporate bonds are one example of a corporate bond offering. Current offerings provide stated annual interest rates ranging from 9% to 13%, depending on the applicable offering and term.
Quick Tip
When evaluating a corporate bond, consider more than the stated interest rate. Review the issuer’s financial condition, the offering documents, the investment’s liquidity, and the risks associated with the investment.
Investor Insight
An issuer’s financial statements, public disclosures, and offering materials can help prospective investors evaluate its ability to meet its obligations. Phoenix Energy makes financial information available through its SEC filings and offering documents.
Certificates of Deposit (CDs)
Certificates of Deposit (CDs) are deposit accounts offered by banks and credit unions that generally pay a fixed interest rate for a specified period of time. In exchange for agreeing to leave funds on deposit until maturity, investors typically receive a stated rate of interest.
Most bank-issued CDs are insured by the Federal Deposit Insurance Corporation (FDIC), and most credit union CDs are insured by the National Credit Union Administration (NCUA), subject to applicable coverage limits and requirements. Investors who withdraw funds before maturity may be required to pay an early withdrawal penalty, which can reduce investment returns.
Interest earned on CDs is generally subject to federal, state, and local income taxes in the year it is earned.
Quick Tip
CDs may be appropriate for investors seeking principal preservation and a known interest rate over a defined period. Before purchasing a CD, review the maturity date, early withdrawal penalties, and applicable insurance limits.
Investor Insight
While CDs generally offer a predictable return if held to maturity, they may not keep pace with inflation during periods of rising prices. Investors should also consider whether they may need access to their funds before the CD matures.
Fixed Annuities
Fixed annuities are insurance contracts issued by insurance companies. In exchange for a premium payment, the insurer agrees to credit interest at a stated or contractually determined rate for a specified period or to provide a series of future income payments, depending on the terms of the contract.
Unlike bank deposits or bonds, fixed annuities are insurance products rather than securities in many cases. Their guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. They are not insured by the FDIC or backed by the U.S. government.
Earnings within many fixed annuities grow on a tax-deferred basis until withdrawn. Withdrawals made before certain ages or during applicable surrender periods may result in surrender charges, taxes, or additional penalties.
Quick Tip
Fixed annuities may appeal to investors seeking tax-deferred growth or guaranteed income options. Investors should carefully review surrender charges, payout options, fees, and the financial strength of the issuing insurance company before purchasing a contract.
Investor Insight
Not all annuities are the same. Fixed, fixed indexed, and variable annuities have different risk profiles, fee structures, and return characteristics. Investors should understand the specific features of the contract they are considering.
Fixed income compared side by side
Although many fixed-income investments provide interest payments and have a defined maturity or payment schedule, they differ in important ways. Factors such as the issuer, credit quality, liquidity, and tax treatment can all influence which type of investment may be appropriate for a particular investor.
| Factor | Government bonds | CDs | Annuities | Corporate bonds |
|---|---|---|---|---|
| Typical Use | Capital preservation | Short-term safe savings | Long-term income | More income per dollar |
| Typical return | Lower | Low to modest | Varies, often capped | Higher, varies by issuer |
| Backing | U.S. government | FDIC/NCUA to limits | Insurer ability | Issuer credit only |
| Liquidity | High | Low, penalty | Low in surrender | Varies, some illiquid |
| Risks to consider | Inflation, rates | Inflation, lock-in | Fees, complexity | Issuer default |
| Taxes | Federal only (Treasuries) | Ordinary income | Tax-deferred | Ordinary income |
General comparison for illustrative purposes. Terms, backing, and tax treatment vary by specific product and issuer.
Why investors hold fixed income
Fixed-income investments are commonly used as part of a diversified investment strategy. Depending on an investor’s objectives, they may provide current income, help manage portfolio risk, or complement other investments.
Common reasons investors include fixed-income investments in a portfolio include:
Predictable Income
Many fixed-income investments provide interest payments according to a stated schedule. For investors seeking regular cash flow, these payments may provide a more predictable income stream than investments whose returns depend primarily on changes in market prices.
Portfolio Diversification
Because different asset classes often respond differently to changing market conditions, fixed-income investments may help diversify a portfolio when used alongside other investments. Diversification, however, does not eliminate investment risk or guarantee against loss.
Capital Structure Considerations
Corporate bondholders have a higher priority than common shareholders with respect to an issuer’s assets in a bankruptcy or liquidation proceeding. However, recovery is not guaranteed and depends on the specific circumstances of the issuer and the applicable bankruptcy process.
A Range of Investment Characteristics
The fixed-income market includes investments with a wide range of credit quality, maturities, liquidity profiles, and interest rates. U.S. Treasury securities, certificates of deposit, municipal bonds, investment-grade corporate bonds, and higher-yield corporate bonds each present different combinations of risk and potential return.
What Are the Risks of Fixed-Income Investments?
Like all investments, fixed-income investments involve risks. The significance of each varies depending on the type of investment, the issuer, market conditions, and an investor’s individual circumstances. While not exhaustive, risks usually include:
Interest Rate Risk
Changes in prevailing interest rates can affect the market value of many fixed-income investments before maturity. In general, when market interest rates rise, the market value of existing fixed-rate bonds may decline.
Credit Risk
Corporate bonds and other debt securities are subject to the possibility that an issuer may fail to make scheduled interest payments or repay principal when due. An issuer’s creditworthiness can vary and is a critical consideration when evaluating a fixed-income investment.
Inflation Risk
Inflation may reduce the purchasing power of future interest payments and principal repayments. For this reason, investors often consider expected inflation when evaluating fixed-income investments.
Liquidity Risk
Some fixed-income investments may be difficult to sell before maturity or may trade at prices below the original purchase price. Liquidity varies by investment type, issuer, and market conditions.
How Do Investors Evaluate These Risks?
Investors commonly consider several factors when evaluating fixed-income investments, including:
- Diversifying investments across issuers, sectors, and asset classes.
- Matching investment maturities with anticipated cash-flow needs.
- Reviewing the issuer’s financial condition and public disclosures.
- Understanding the investment’s liquidity and any restrictions on resale.
- Considering how the investment fits within an overall investment strategy and individual risk tolerance.
Because every investment involves risks, prospective investors should carefully review the applicable offering documents and consult their own financial, legal, or tax advisers before investing.
How Fixed-Rate Investments Differ
Fixed-rate investments have different characteristics, and investors often compare those characteristics when evaluating investment options. Factors such as investment time horizon, liquidity needs, tolerance for risk, tax considerations, and income objectives all influence which types of fixed-income investments may be appropriate.
| Investors May Consider… | Examples | Why |
|---|---|---|
| Protect principal you may need soon | High-yield savings, short CDs, T-bills | Insured or government-backed, liquid |
| Long-term income | Annuities, long Treasuries, bond ladders | Can provide a stream of income over time; liquidity varies by investment type. |
| Hedge inflation | I Bonds (inflation-linked U.S. savings bonds), TIPS (Treasury Inflation-Protected Securities) | Payments or principal are designed to adjust with inflation, depending on the investment. |
| Higher stated yields generally involve higher credit risk | Corporate bonds, including high-yield | Higher coupons for higher issuer credit risk |
The table above is intended as a general educational overview rather than an investment recommendation. Individual circumstances vary, and investors should evaluate each investment based on their own financial objectives and the specific terms of the offering.
A 2026 Illustrated after-tax and after-inflation comparison
A stated interest rate does not necessarily reflect the amount of income an investor ultimately retains. Depending on the investment, taxes and inflation may reduce an investment’s after-tax purchasing power. The examples below illustrate how different stated interest rates compare after applying common tax and inflation assumptions. They include selected publicly available rates and the stated interest rates of Phoenix Energy’s currently offered corporate bonds solely to demonstrate the calculation methodology. The examples are for illustrative purposes only and are not intended as projections of future returns, individualized tax advice, or investment recommendations.3| Option | Stated Rate | After 32% Tax | Estimated After 3% Inflation |
|---|---|---|---|
| 1-year CD | 4.15% | 2.82% | about −0.18% |
| 10-year Treasury | 4.46% | 3.03% | about 0.03% |
| High-yield corporate (avg) | 6.90% | 4.69% | about 1.69% |
| Phoenix Energy bond (low end) | 9.00% | 6.12% | about 3.12% |
| Phoenix Energy bond (high-end) | 13.00% | 8.84% | about 5.84% |
Illustrative calculations assume a 32% federal marginal tax rate and 3.0% annual inflation. Actual results will vary based on an investor's tax circumstances, inflation, and the characteristics of the investment. These calculations have not been independently verified and are provided for illustrative purposes only. This information is not tax or financial advice.
Actual after-tax returns will vary based on an investor’s tax situation, inflation, and the characteristics of the investment.
Because the tax treatment of fixed-income investments differs among investment types, investors should consult their own tax adviser regarding the tax consequences of any investment.
How Do Higher-Yield Corporate Bonds Fit Within Fixed-Income Investing?
Corporate bonds offering higher stated interest rates have different investment characteristics than U.S. Treasury securities or FDIC-insured certificates of deposit, including differences in issuer, liquidity, and credit quality.
Higher stated yields may reflect one or more factors, including differences in credit quality, liquidity, investment term, or other characteristics of the investment. Investors should consider these factors alongside the stated interest rate when evaluating a fixed-income investment.
Corporate bonds issued by companies operating in particular industries may also be affected by industry-specific conditions. For example, companies operating in the energy sector may be affected by changes in commodity prices, operating costs, regulatory developments, and other factors that could influence their financial condition.
Like all corporate bonds, higher-yield corporate bonds are not insured by the FDIC or guaranteed by the U.S. government. Investors may lose some or all of their investment if an issuer fails to meet its obligations.
Phoenix Energy Corporate Bonds
Phoenix Energy offers corporate bonds through both a registered public offering and a Rule 506(c) private placement. The terms, eligibility requirements, interest rates, investment minimums, and other features vary depending on the applicable offering and are described in the relevant offering documents. Prospective investors should carefully review the applicable offering materials before investing.
Frequently Asked Questions
Is Fixed-Rate Investing Safe?
Safety depends on the type of investment. U.S. Treasury securities are generally considered to have minimal credit exposure because they are backed by the full faith and credit of the United States. Certificates of deposit issued by FDIC-insured banks are generally insured up to applicable coverage limits. Corporate bonds, including higher-yield corporate bonds, depend on the issuer’s ability to make scheduled interest payments and repay principal when due, and investors may lose some or all of their principal if the issuer is unable to meet its obligations.
What Is the Difference Between Corporate Bonds and CDs?
Although both may provide fixed interest payments over a specified term, they differ in several important respects.
A certificate of deposit (CD) is a bank deposit that may be insured by the FDIC, subject to applicable coverage limits. A corporate bond is a debt security issued by a company to raise capital and is not FDIC-insured. Because repayment depends on the issuer’s financial condition, corporate bonds generally involve greater credit risk than FDIC-insured CDs. Differences in interest rates often reflect those differences in credit risk, along with liquidity and other investment characteristics.
Can Corporate Bonds or CDs Be Held in an IRA?
Depending on the investment and the custodian, many corporate bonds and certificates of deposit may be held in traditional or Roth IRAs. Certain privately offered securities may require a self-directed IRA or another qualified custodian.
Because tax treatment depends on an investor’s individual circumstances, investors should consult their own tax adviser regarding IRA eligibility and the tax consequences of any investment.
Is It Better to Lock in Fixed Rates Now or Wait?
There is no single answer that applies to every investor.
Interest-rate decisions depend on market conditions, an investor’s time horizon, liquidity needs, and investment objectives. Rather than attempting to predict future interest-rate movements, some investors choose to diversify maturities through strategies such as bond or CD ladders.
Can You Lose Money Investing in Fixed Income?
Yes.
Whether an investor can lose money depends on the type of investment and the circumstances. Investors who sell certain fixed-income investments before maturity may receive less than their purchase price if market conditions have changed. In addition, repayment of principal and interest on corporate bonds depends on the issuer’s ability to meet its obligations. If the issuer is unable to make scheduled interest payments or repay principal when due, investors may lose some or all of their investment.
Before investing, prospective investors should review the applicable offering documents and other available disclosures to understand the investment’s terms, characteristics, and principal risk factors.
Fixed-Rate Investing in 2026
Fixed-rate investments include a broad range of products with different issuers, structures, liquidity characteristics, and potential returns. Understanding how these investments differ can help investors evaluate which options align with their financial objectives, investment horizon, and personal circumstances.
Phoenix Energy’s corporate bonds are one example of a fixed-income investment. Depending on the applicable offering, they provide stated annual interest rates ranging from 9% to 13%, subject to the terms of the offering and the company’s ability to meet its obligations. Prospective investors should review the applicable offering documents, financial statements, and other available disclosures before making any investment decision.
To learn more about Phoenix Energy’s current bond offerings, review the applicable offering materials, financial statements, and other public disclosures, visit Phoenix Energy’s website, or attend an informational webinar before making an investment decision.
Forward Looking Statements
This article is provided for educational purposes only and does not constitute investment, legal, or tax advice. Investing involves risk, including the possible loss of principal. Review the applicable offering documents before making any investment decision.
Footnotes
This data was generated from Bank Rate, FRED, Phoenix Energy, and not independently verified. Rates and yields are approximate and are provided for informational purposes only. Figures reflect information available as of June 26, 2026.
All figures are as of June 2026, unless otherwise indicated. The accuracy of stated figures are not independently verified.
Illustrative calculations assume a 32% federal marginal tax rate and 3.0% annual inflation. Actual results will vary based on an investor’s tax circumstances, inflation, and the characteristics of the investment. These calculations have not been independently verified and are provided for illustrative purposes only. This information is not tax or financial advice.