| Definition |
Income that remains constant over time and is predictable. |
Income that fluctuates and is not guaranteed. |
| Examples |
Bonds, fixed deposits, pensions. |
Stocks, mutual funds, business profits. |
| Risk Level |
Low risk – returns are stable and known. |
High risk – returns depend on market performance. |
| Return Type |
Interest or fixed periodic payments. |
Dividends or capital gains (not fixed). |
| Investment Objective |
Preserve capital and receive regular income. |
Achieve higher returns with growth potential. |
| Suitable For |
Conservative investors and retirees. |
Aggressive investors willing to take risks. |
| Market Sensitivity |
Less sensitive to market fluctuations. |
Highly affected by market volatility. |
| Predictability |
Highly predictable income flow. |
Uncertain and can vary month to month. |
| Security |
Backed by governments or corporations with repayment terms. |
Depends on business or market performance. |
| Liquidity |
Often lower liquidity; may have lock-in periods. |
Generally more liquid, especially in stock markets. |
| Capital Protection |
Capital is usually safe unless issuer defaults. |
Capital may fluctuate and can be lost. |
| Taxation |
Interest income may be taxed as per slab. |
Capital gains and dividends may be taxed differently. |
| Common Users |
Risk-averse investors seeking stability. |
Growth-oriented investors seeking higher returns. |
| Time Horizon |
Short to medium term. |
Medium to long term. |
| Return Example |
Bond paying 7% annual interest. |
Stock that may rise 20% or fall 10% in a year. |
fixed income vs variable income
