The Wise Investor
5.1 Interest-bearing investments
John sat on the park bench in stony silence.
Autumn had long since passed, and winter had
fallen on the park. Snow fell softly, and Kate pulled
her coat tightly around her to keep out the cold.
Although the air was very cold now, Kate and
John continued to meet in the park. Winter brought
its own character to the park, and small animals
scurried through the snow around the edge of the
Eventually John spoke. His voice was very quiet
now, and Kate worried that their discussions were
talking a heavy toll on her grandfather.
"Kate," John said at length, "we have finally
come the point of discussing specific investments.
First we have the interest-bearing investments.
These are the most familiar investments to many of
us, and the simplest to understand. There are a
great variety of interest-bearing investments to
choose from, but they are all essentially the same.
You are simply loaning your money to a person
or organisation, and receiving interest for doing so.
Most of the money invested on an interest-bearing
basis is done for a fixed term and at a fixed interest
This includes examples like a two-year term
deposit with a bank, or a three-year government
bond. This sector is often called the 'fixed-interest'
sector, rather than the more general name of the