Building Wealth with Fixed Income Investments

When people think about investing, they often focus on stocks, but fixed income investments, or bonds, deserve just as much attention. Bonds can bring income and stability to a portfolio during times of market volatility.

At Peak Asset Management, we build bond portfolios with the goal of supporting each client’s bigger financial picture. In this post, we’ll cover: 

1. What are fixed income investments? 
2. How fixed income investments may add value to your portfolio.
3. How Peak Asset Management manages fixed income investments for clients.

What are Fixed Income Investments?

Fixed income investments, or bonds, are loans that can be bought or sold. Bond investors typically receive interest payments (coupons) and may benefit from modest price appreciation. As the name suggests, a bond’s fixed interest payments are a key component of its return. 

Bonds often yield more income than stocks; at the time of this writing in October 2025, the Bloomberg U.S. Aggregate Bond Index (sometimes called the ‘U.S. Agg’) distributes income at about three times the yield of the S&P 500 stock index.

A critical differentiator of bonds is that the principal payment (or maturity) and coupon payment terms are often set out before you purchase them. This payment schedule lowers the risk of investing in fixed income securities and provides known cash flows that can be a source of cash for you.   

Types of Fixed Income Investments

Bonds are not monolithic. Some are designed for steady income, others for tax efficiency, and others for cushioning against stock market swings. In fact, by some measures, the bond market is more highly nuanced and complex than the stock market. 

At Peak Asset Management, we build bond portfolios that reflect these differences and align with our client’s financial goals.

Bonds may be issued by entities with varying credit quality, in the U.S. or abroad, for periods ranging from days to decades. Here are three of the most common sectors:

• Government/Sovereign bonds: These are issued by national governments, like US Treasury bonds. US Treasury bonds are generally low-risk investments.
• Corporate bonds: Issued by companies and can be low or high-risk. Higher-risk bonds pay a higher interest rate.
• Municipal bonds: Issued by local government entities. Municipal bond income can be exempt from federal and state taxes. 

Risks of Fixed Income Investing

At Peak Asset Management, we include a healthy dose of risk management in our bond portfolio because even though bonds can be a steady investment, they are not risk-free. The two primary risks to bond prices are interest rate and credit risk.

• Interest Rate Risk. As interest rates go up, bond prices go down, and this fact is magnified for longer-dated bonds. At Peak Asset Management, our goal is to manage this for you by intentionally selecting a maturity profile that aligns with client needs and our assessment of market conditions.
• Credit risk is the risk that a bond issuer defaults or becomes less creditworthy in the eyes of the market, causing their bond’s price to drop. While a measured amount of credit risk can enhance portfolio diversification, we are disciplined in avoiding excessive risk-taking driven by the pursuit of higher yields.

How Fixed Income Investments Can Add Value to a Portfolio

Fixed income investment strategies may help protect wealth, particularly during periods of stock market volatility. While we’ve noted that bonds are not risk-free, their lower volatility and potential for price appreciation during market stress (sometimes called a ‘flight to safety’) make them a valuable stabilizing force in a portfolio. 

This dynamic is especially evident during major market disruptions, as illustrated during the COVID-19 and Great Recession market events.

The market turmoil during the COVID-19 crisis highlights the difference in volatility between stocks and bonds. On March 23, 2020, the S&P 500 had dropped 33% from the start of the market crisis, marking the lowest point in the stock market during that time. 

In contrast, the U.S. Agg declined by only about 1% during the same period, demonstrating the relative stability of bonds compared to stocks.

During the Great Recession in 2007-2009, the U.S. Agg returned over 7%, while the S&P 500 fell by 53%. This is an example of the ‘flight to safety’ concept in which higher demand for bonds may result in price appreciation during periods of stock market volatility. 

Peak Asset Management’s approach to Fixed Income Investing in Louisville, Colorado

Peak Asset Management’s approach to fixed income investing is centered around wealth protection and client cash flow needs. Our goal is for clients’ fixed income assets to efficiently generate income and maintain portfolio stability.

A well-managed fixed income portfolio can help protect wealth. The graphs above show that bonds can act as a ‘ballast’ to steady portfolio values during market drawdowns. Allocating to bonds may help clients make decisions with greater clarity during volatile stock market times.  

There is a natural synergy between fixed income securities and cash flow planning for clients. The known cash flows associated with coupon and bond maturity payments can create a reliable income stream that can be used to fund portfolio distributions for clients, regardless of market conditions. 

Fixed Income Investment Strategies in Louisville, Colorado

At Peak Asset Management, we focus on each client’s unique financial goals and objectives when building their fixed income investment portfolio. We tailor bond investment strategies by adjusting portfolio characteristics like maturity profile, security selection, and bond investment vehicle. Here are some key factors we consider:

• Cash flow timing: Do you have near-term cash flow needs, or are you saving for future needs? We fine-tune the amount of short, intermediate, and long-dated bonds based on your situation. 
• Recurring cash flow needs: We may create a bond ladder consisting of several future-dated bonds that mature in concert with repeating future cash needs.
• Tax Considerations: If you are in a higher tax bracket, we may consider buying municipal or treasury bonds, which can have tax advantages. 

Contact us at Peak Asset Management if you want to learn more about how fixed income investing in Louisville, CO can help support your financial goals.