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Wise Money: Using the Endowment Investment Approach to Minimize Volatility and Increase Control by Daniel Wildermuth

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13Fixed Income

UP TO THIS POINT, ALL DISCUSSIONS ON DIFFERENT INVESTMENTS have focused on performance-oriented investments. An increased emphasis on holding highly diversified performance-oriented assets with low(er) correlation is the fundamental basis of the endowment model. Fixed income, however, still has a place in most endowment models, and many individual investors can find it much more beneficial than do endowments because of its complete liquidity and lower volatility.

What Is Fixed Income?

Before jumping into the category, let’s be sure we are using a common definition. I’m using the term fixed income to refer to any type of investment that (1) is not equity, (2) requires a borrower to make payments according to a predetermined schedule, ...

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