What is fixed interest (also known as bonds)?

A fixed interest investment (also known as a bond) is a loan of cash to a government or company for a set period of time. The main benefit of holding a bond is that in return for lending money to a government or company, investors receive regular interest payments for as long as the money is loaned for! Once the agreed period of time that the money is loaned for is up, the government or company who borrowed the money will return the loaned amount back to the investor.

In a Wealthsimple portfolio, you will be receiving interest payments from your fixed interest funds. These interest payments are not displayed in your Wealthsimple account as separate receipts because your investments are made up of something called "accumulation" units. "Accumulation" units immediately use the proceeds of any interest payments and reinvests them into additional units in the fund to ensure that your cash works as hard as possible for you, by being invested in the market, and not sitting idly.