We all have those goals that we cannot gamble with since they are so important to us and not attaining them would mean a big blow for us. Saving and investing for such goals out to be very deliberate and the investments out to be carefully selected to ensure that you are gaining the maximum returns without taking on additional unnecessary risks. When looking at fixed income investments some of the key considerations that one needs to look at include:

​Security: One need to be sure that the investments undertaken is secure and that the probability of loss is very low. From the fixed income part, the most secure asset is considered to be the government securities as the government is considered not to default;

​The Returns: One needs to ensure that they are selecting the investment with the highest return at the same level of risk. If for example you are investing in the government bond, for an equal tenor one needs to select the bond that has the highest periodic income (the coupon) as this reduces the duration risk;

​Time Horizon: Matching your investments to your goals is important. This helps ensure that you have the cash when really need it. There are investments with different tenors and so this is not difficult to achieve;

​Liquidity: No matter how well you have planned your life, things happen and you might need to liquidate your investments it is therefore important that as one invests you look for the assets that you can convert to cash easily without losing value. Some of the assets like bank deposits work, the money market funds also are easy to liquidate;

​Market: while investing in the fixed income market it is good to look at availability of a market for these assets. The more developed markets for the securities are the more transparent the investment ends up being and also means that you can liquidate the investment with ease;

​Issuer: Understanding the person offering the fixed income investment is important since one can do their own analysis on the quality of the entity. Some companies or the underlying assets have gone through the rating processes and this tends to add some comfort to the investors about the soundness of their investments;

​Inflation: one of the key thing that one needs to look at is the rate at which their funds are loosing value due to inflation, one should always target to invest their funds in funds that are generating returns that are above inflation;

​Taxation: Understanding the taxation status of the instrument and the individual is important as one of the largest expenses for most people is tax. Capitalising on the tax efficient investments is key while building a portfolio.

​The main assets that qualify under the fixed income assets include:

​Treasury bills and bonds: These are the instruments that the government uses to borrow money from the market. They are issued in the local currency. Bills are short term with tenors of 91, 182 and 364 days and are issued every week. Bonds are long term with tenors of upto 30 years and are largely issued monthly. The minimum investment amounts for Treasury bills is Kshs 100,000 and Kshs 50,000 for Treasury bonds. There is a ready market for bonds but none exists for treasury bills;

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​Eurobonds: These are bonds by government issued in the foreign markets. They trade in markets outside Kenya and they have tenors ranging from 5 years to 10 year. They are denominate in USD and they are only issued at an ad-hoc basis but forms a significant part of the Kenyan government borrowing;

​Deposits: These are deposits placed with banks and other financial institutions like the microfinance institutions. The clients and the bank agree on all the matters like the rate, tenor, penalty if recalled earlier etc. The key is to ensure one places their funds with a sound bank;

​Corporate Bonds and Commercial Papers: These are loans directly to corporates. Corporate bonds are long term with the average duration of between three to five years while Commercial papers are short term instruments with tenors of between three months to one year. One needs to ensure that they have done their background check on the issuer and that they are comfortable with the financial health and governance of the institution. The minimum investment amounts in most cases ranges around Kshs 1mn;

​Money Market Funds: Though the returns are not fixed in advance, the money market funds are more of fixed income since one knows on average what to expect in terms of returns. They are very liquid and depending on the provider the minimum investments amount can be as low as Kshs 1,000

​Fixed income assets provide stability to the portfolios and one should ensure that they put a certain portion of their assets here to protect against the volatility in the other asset classes. Matching the investment duration of the asset and the obligations is key since despite the assets returns being known in advance, pressure to sell could lead to a capital loss. Knowing the right person to speak to when making this crucial decision is important.