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Fixed Term Investments
Explore fixed-term investment opportunities, including fixed-rate bonds and fixed-term deposits, with clear information on terms, rates, income, maturity and risk.
Strategies / Fixed Term Income
Overview
Fixed-term investments can play an important role in a diversified investment strategy by providing investors with a defined investment period and, depending on the product, a predetermined or structured return.
At Coyne Holdings Pty Limited, we focus on helping investors understand opportunities across fixed-term bonds, term deposits and other structured investment solutions, alongside broader wealth management and investment strategies.
Fixed-term investments may be particularly relevant for investors who have capital that does not need to remain immediately accessible and who want to establish greater certainty around the investment period.
Defined
Investment period
Documented
Terms at the outset
Laddered
Typical portfolio use
What We Look For
The considerations below shape how fixed term investments is researched, structured and reviewed for each client.
01
Defined investment periods with documented terms
02
Capital allocation aligned to investor objectives
03
Structured opportunities across a range of terms
04
Portfolio laddering across staggered maturities
Our Approach
A consistent, documented process applied to every engagement.
01
Term selection
Investment periods matched to when capital is genuinely required.
02
Documentation review
Terms, security, counterparties and conditions assessed before recommendation.
03
Laddering
Maturities staggered so capital becomes available at intervals.
04
Transparency
Risks, liquidity constraints and fees explained in plain language.
What Are Fixed Term Investments?
Investing capital for a defined period on documented terms
A fixed term investment is an arrangement in which capital is committed for an agreed period, on terms documented before the investment is made. The two most common forms in Australia are fixed rate bonds, which are debt investments issued by governments, banks and companies, and fixed term deposits, which are deposits placed with an authorised deposit-taking institution.
The defining feature is the term. Instead of holding capital in an open-ended investment whose value moves continuously, an investor selects an investment period — commonly anywhere from one month to five years or longer — and knows in advance the date at which the capital is scheduled to become available again.
How interest is calculated and paid
Interest on a fixed term investment is calculated on the amount invested at the rate set out in the terms. On a bond, that rate is called the coupon and is applied to the bond's face value. On a term deposit, the rate is applied to the deposited amount for the length of the term.
Payment frequency varies by product. Interest may be paid monthly, quarterly, semi-annually, annually, or in a single payment at maturity. Where interest is paid at maturity rather than during the term, the investment produces no cash flow in the interim, which matters for investors relying on the income.
What happens at maturity
At the maturity date the term ends. Subject to the issuer or institution meeting its obligations, the investor receives the final interest payment together with the return of the principal — the face value of a bond, or the deposited amount of a term deposit. The investor can then reinvest, redirect the capital or withdraw it.
Repayment of capital is a contractual obligation of the issuer or institution, not a certainty. Where the counterparty fails, some or all of the capital may not be returned.
Why investors consider them
- A defined investment period, so capital can be matched to a known future requirement
- An interest rate that is set at the outset rather than varying with the market
- Scheduled income, where the product pays interest during the term
- A defensive or income-oriented counterweight to equities and other growth assets
- A structured way to build a portfolio across staggered maturity dates
Fixed term investments are not appropriate for every investor or for every portion of a portfolio. Capital committed for a term is generally not available on demand, and the return is fixed whether or not market rates subsequently rise.
Fixed Term Bonds
Debt investments with a stated coupon and a defined maturity date
A fixed rate bond is a debt instrument. The investor lends capital to an issuer — a government, a bank or a company — and the issuer agrees to pay a stated rate of interest for a defined period and to repay the face value at maturity.
Coupon rates and face value
The coupon is the fixed annual interest rate applied to the bond's face value, which is the amount scheduled for repayment at maturity. A bond with a $100 face value and a 5% coupon pays $5 a year for the life of the bond, regardless of what happens to interest rates in the wider market.
Bond prices and yield to maturity
Once issued, a bond can trade in the secondary market at a price above or below its face value. Because the coupon is fixed in dollar terms, the price adjusts so that the return offered to a new buyer is competitive with prevailing rates. When market rates rise, existing bond prices generally fall; when market rates fall, existing bond prices generally rise.
Yield to maturity brings those elements together. It is the total annualised return an investor would receive by buying at the current market price and holding to maturity, taking into account the coupon payments and any difference between the purchase price and the face value. Yield to maturity, not the coupon alone, is the meaningful basis for comparing one bond with another.
A fixed coupon does not mean a fixed market value. The income is fixed; the price of the bond before maturity is not.
Credit risk and issuer quality
Every coupon payment and the repayment of face value depend on the issuer's ability to pay. Australian Government bonds sit at one end of the credit spectrum; senior bank paper, investment-grade corporate bonds and unrated or sub-investment-grade issues sit progressively further along it, generally offering higher yields in exchange for higher credit risk.
- The identity and financial strength of the issuer
- Whether the bond is secured or unsecured, and where it ranks on a wind-up
- Any credit rating, and what the rating does and does not assess
- The maturity date and the length of the commitment
- The coupon rate and how frequently interest is paid
- The prevailing interest rate environment
- Secondary market liquidity, and whether an exit before maturity is realistic
Liquidity and secondary market pricing
Some bonds trade actively; others rarely trade at all. Where liquidity is limited, an investor wanting to exit before maturity may only be able to do so at a price materially below the theoretical value, or may not be able to sell at all. Liquidity should be assessed before the investment is made, not at the point an exit is needed.
Bonds are not covered by the Financial Claims Scheme simply because they carry a fixed rate or a fixed maturity. Corporate bonds, debentures and unsecured notes are different investments from bank term deposits, and ASIC's MoneySmart warns that investors in certain debt securities can lose some or all of their money if the issuer fails.
Fixed Term Deposits
Defined terms and a fixed rate with an authorised deposit-taking institution
A term deposit is an arrangement in which an investor places capital with an authorised deposit-taking institution — an Australian bank, building society or credit union authorised by APRA — for a defined period at a specified interest rate. MoneySmart describes terms as commonly ranging from one month to five years.
How a term deposit works
- The investor places an agreed amount with the institution
- A defined term is selected from those the institution offers
- A specified interest rate applies for that term, in accordance with the product terms
- Capital generally remains invested until the maturity date
- At maturity the investor can reinvest, withdraw or redirect the capital and interest
The rate is fixed for the term. If market rates rise during the term, the deposit continues to pay the original rate; if rates fall, the original rate continues to apply in the investor's favour. Rates differ between institutions and across terms, so comparing rate, term, fees and conditions together is more useful than comparing headline rates alone.
Early withdrawal considerations
Access to capital before maturity is generally restricted. Where early withdrawal is permitted at all, it is typically subject to a notice period and an interest adjustment or reduction set out in the product terms. Investors should read those conditions before committing capital they may need.
Bank and ADI credit risk
A term deposit is a claim on the institution holding it. The relevant credit consideration is therefore the financial strength of that institution, and how much of an investor's capital is concentrated with any single one.
Australian deposit protection: the Financial Claims Scheme
The Financial Claims Scheme (FCS) is an Australian Government scheme administered by APRA. It can apply to eligible deposits if a covered authorised deposit-taking institution fails.
Eligible deposits are protected up to $250,000 per account holder, per ADI, subject to the terms of the scheme.
The limit applies to the total eligible deposits held by an account holder with that ADI, not $250,000 for each account. The FCS is not a general investment guarantee and does not apply to bonds, notes, debentures or other investment products that are not eligible deposits with a covered ADI.
| Deposits with one ADI | Example 1 | Example 2 |
|---|---|---|
| Term deposit | $150,000 | $200,000 |
| Savings account | $75,000 | $100,000 |
| Total eligible deposits | $225,000 | $300,000 |
| Within the FCS limit | $225,000 | $250,000 |
In Example 1 the total falls within the $250,000 limit. In Example 2 the amount above the limit should not be assumed to be protected, although an investor may have a claim through the institution's liquidation process.
The banking licence matters
Several consumer banking brands can operate under the same underlying ADI. Because the limit applies per ADI rather than per brand, holding deposits across two brands does not necessarily mean holding deposits across two separate institutions. APRA specifically asks investors to consider deposits held under different trading names when calculating total exposure.
Deposits within superannuation
Eligible deposits held by the trustee of a superannuation fund, including an SMSF, may be covered. The $250,000 limit generally applies to the fund as the account holder with that ADI rather than separately to each member, so a fund's existing deposits with the same institution should be considered before assuming a new deposit attracts additional protection.
Fixed Term Bonds vs Fixed Term Deposits
A factual comparison — neither is universally better than the other
Bonds and term deposits both offer a fixed rate over a defined term, but they are structurally different investments with different risks. The comparison below is general; the terms of any particular investment govern.
| Feature | Fixed Term Bonds | Fixed Term Deposits |
|---|---|---|
| Issuer | Governments, banks, corporations and other issuers | An APRA-authorised deposit-taking institution |
| Investment structure | A tradeable debt security | A deposit account held with an institution |
| Fixed interest | A coupon fixed at issue and applied to face value | A rate fixed for the selected term |
| Typical term | Commonly one to ten years or longer at issue | Commonly one month to five years |
| Interest payment | Often semi-annual or quarterly coupons | Monthly, quarterly, annually or at maturity, by product |
| Capital repayment | Face value scheduled at maturity, subject to issuer performance | Deposited amount at maturity, subject to institution performance |
| Market value before maturity | Moves with interest rates and credit conditions | No market price; the deposit is not traded |
| Liquidity | May be sold in the secondary market where a buyer exists, at the prevailing price | Generally locked for the term; early access subject to notice and interest adjustment |
| Credit risk | Depends on the issuer; ranges from sovereign to unrated | Depends on the ADI |
| Interest rate risk | Yes — price falls if market rates rise before maturity | No price effect, but the fixed rate may lag if market rates rise |
| Deposit protection | Not covered by the Financial Claims Scheme | Eligible deposits may be covered up to $250,000 per account holder, per ADI |
| Minimum investment | Varies by issue and access route; can be substantial | Typically modest, set by the institution |
| Potential yield | Varies widely with credit quality and term | Set by the institution for the term offered |
| Investor considerations | Issuer quality, yield to maturity, ranking, liquidity | Institution, term, early withdrawal terms, FCS concentration |
A higher advertised bond rate and a lower deposit rate are not directly comparable. The additional yield on a bond generally reflects additional credit, market price and liquidity risk that a term deposit with a covered ADI does not carry in the same form.
How Fixed Term Investments Work
From investment date to principal repayment
- 1Investment dateCapital is committed and the terms — amount, rate, term and payment frequency — are set.
- 2Investment termThe agreed period runs. Capital generally remains committed until maturity.
- 3Fixed interest paymentsInterest or coupons are paid on the schedule set out in the terms, or accrue to maturity.
- 4MaturityThe term ends and the final interest payment falls due.
- 5Principal repaymentThe face value or deposited amount is repaid, subject to the issuer or institution meeting its obligations.
At maturity the investor decides whether to reinvest at the rates then available, redirect the capital to another part of the portfolio, or withdraw it. The rate available at that point may be higher or lower than the rate on the maturing investment — this is reinvestment risk.
Key Investment Terms
The vocabulary of fixed term investing, in plain English
- Coupon rate
- The fixed annual interest rate a bond pays, expressed as a percentage of its face value.
- Yield to maturity
- The total annualised return from buying at today's price and holding to maturity, including coupons and any gain or loss to face value.
- Face value
- The amount a bond is scheduled to repay at maturity, and the amount its coupon is calculated on. Also called par value.
- Market price
- What a bond is currently worth in the secondary market. It can be above or below face value.
- Maturity date
- The date the investment ends and the principal is scheduled to be repaid.
- Term
- The length of time between the investment date and the maturity date.
- Interest payment
- The cash paid to the investor during the term, on the frequency set out in the product terms.
- Credit rating
- An agency's opinion of an issuer's ability to meet its obligations. It is an opinion, not a guarantee, and can be withdrawn or changed.
- Issuer
- The entity borrowing the money — a government, bank or company for a bond, or an ADI for a deposit.
- Principal
- The capital amount invested and scheduled for repayment, separate from the interest it earns.
- Liquidity
- How readily an investment can be converted to cash before maturity, and at what cost.
- Duration
- A measure of how sensitive a bond's price is to a change in interest rates. Longer duration means larger price movements.
Types of Fixed Term Investments
The main categories investors encounter
Fixed rate bonds
Debt securities paying a stated coupon to a defined maturity, tradeable in the secondary market at prevailing prices.
Fixed term deposits
Deposits placed with an APRA-authorised institution for a set term at a set rate, with eligible deposits potentially covered by the Financial Claims Scheme.
Government bonds
Issued by the Australian Government or by state and territory governments, generally regarded as the highest credit quality in the domestic market.
Bank bonds
Senior and subordinated debt issued by banks. Ranking varies significantly between issues and materially affects the risk taken.
Corporate bonds
Debt issued by companies. Yields are generally higher than government issues, reflecting the additional credit risk of the borrower.
Investment-grade fixed income
Bonds rated at or above the investment-grade threshold by a recognised agency. A rating narrows the range of expected outcomes but does not remove risk.
Current Fixed Term Opportunities
Where to see indicative rates and available issues
Rates, yields, prices and availability change constantly, so we do not publish static figures on this page. Our Bond Index sets out the indicative levels we monitor across Australian government, semi-government, bank and corporate issues, together with the terms and credit considerations attaching to each.
Any rates or yields shown across this site are indicative only. Rates, yields, prices and availability may change without notice.
Where a specific fixed term opportunity is relevant to a client's objectives, we set out the issuer, the term, the interest structure, the ranking, the liquidity position and the risks before any investment is considered. Availability is subject to the terms of the relevant offer.
Who May Consider Fixed Term Investments?
Circumstances in which a defined-term allocation can be relevant
Fixed term investments are not suitable for every investor, and no allocation should be made without reference to an investor's own objectives, financial situation and needs. They are most often considered by investors who are:
- Seeking predictable, scheduled income from part of a portfolio
- Prioritising capital preservation over capital growth for a defined portion of capital
- Diversifying a portfolio that is heavily weighted toward equities or property
- Looking to reduce overall exposure to equity market volatility
- Investing against a defined horizon, such as a known future expenditure or a retirement date
- Building or maintaining a deliberate fixed income allocation within a broader strategy
Investors who may need immediate access to capital, or who require the potential for capital growth above the rate of inflation, should weigh those requirements carefully before committing to a defined term.
Understanding the Risks
What can go wrong, and why a fixed rate is not a fixed outcome
A fixed rate describes the income an investment is contracted to pay. It says nothing about whether that income will be paid, what the investment is worth before maturity, or what the money will buy when it is returned.
Credit risk
The issuer or institution may be unable to pay interest or repay principal. This is the primary risk in any debt investment.
Interest rate risk
If market rates rise, the market value of an existing fixed rate bond generally falls, and a fixed deposit rate may lag rates newly available.
Liquidity risk
It may not be possible to exit before maturity, or only at an unfavourable price or subject to notice periods and interest adjustments.
Reinvestment risk
When the investment matures, prevailing rates may be lower than the rate that has just ended.
Inflation risk
A fixed nominal return can lose purchasing power if inflation exceeds the rate earned over the term.
Market price risk
Bond prices move with rates, credit spreads and sentiment. A sale before maturity can realise less than face value.
Early withdrawal or sale risk
Exiting early can reduce interest received on a deposit, or crystallise a loss on a bond.
Issuer risk
Deterioration in an issuer's financial position can affect both the value of a bond and the likelihood of repayment.
For bonds: a fixed coupon does not mean a fixed market value. For deposits: terms, rates and early withdrawal conditions depend entirely on the product and the institution.
Building a Fixed Term Strategy
Laddering maturities rather than committing to a single date
Rather than placing all capital into a single maturity date, investors may consider spreading investments across several terms so that capital becomes available at intervals and reinvestment occurs across different rate environments.
| Allocation | Term | Purpose |
|---|---|---|
| Investment A | 12 months | Near-term capital requirement |
| Investment B | 24 months | Medium-term allocation |
| Investment C | 36 months | Longer-term allocation |
| Investment D | 48 months | Longer-term income strategy |
As each investment matures, the capital can be reassessed and either reinvested at the rates then available or redirected elsewhere in the portfolio. Laddering does not remove risk, but it avoids locking an entire portfolio into one maturity date and one point in the rate cycle.
Interest income and capital gains are taxed differently
Interest earned on a term deposit is generally assessable income in the year it is earned. The 12-month CGT discount applies to eligible capital gains, not to ordinary interest, and a term deposit should not be presented as receiving a CGT discount because it has been held for more than a year.
| Investor type | General CGT discount on eligible capital gains |
|---|---|
| Individuals and trusts | Can be 50% where the asset has been held at least 12 months |
| Complying superannuation entities | Can be one-third |
| Companies | Generally not available |
Tax outcomes depend on the investment structure, the investor's circumstances and the rules applying at the time. Investors should obtain appropriate tax advice.
The Coyne Holdings Approach
Where a fixed term allocation sits within the whole portfolio
Our focus extends beyond identifying an advertised rate. We consider the role a fixed term investment is intended to play within the broader portfolio — the capital allocated, the term, the liquidity given up, the income required, the credit risk accepted, and how the position interacts with superannuation, equities and other holdings.
Who holds the money?
Whether the investment sits with an APRA-authorised ADI or another type of issuer, and what that means for the risk taken.
Is it an eligible deposit?
Not every fixed-return product is covered by the Financial Claims Scheme. The distinction should never be assumed.
What is the term?
When the capital genuinely becomes available again, and whether that matches the investor's requirements.
What is the return?
Whether it is interest, coupon income or potential capital growth, and how each is treated.
What if funds are needed early?
The exit route, the notice periods, the interest adjustments and the realistic secondary market position.
What is the concentration?
How much capital is committed to a single issuer, institution, sector or maturity date.
Latest Fixed Term Research
Recent analysis from our fixed income and fixed term research
Frequently Asked Questions
What is a fixed term investment?
It is an investment in which capital is committed for an agreed period at a rate set out in the terms. The two most common forms are fixed rate bonds and fixed term deposits. The investor knows the term, the rate and the payment schedule before investing, and the capital is generally not available on demand during the term.
What is a fixed term bond?
A fixed rate bond is a debt security. The investor lends capital to an issuer — a government, bank or company — which agrees to pay a fixed coupon for a defined period and to repay the face value at maturity. Bonds can be bought and sold in the secondary market, so their price moves before maturity even though the coupon does not.
What is a fixed term deposit?
A term deposit is capital placed with an APRA-authorised deposit-taking institution for a defined term at a specified interest rate. The rate is fixed for the term, and eligible deposits may be covered by the Financial Claims Scheme up to $250,000 per account holder, per institution, subject to the scheme's terms.
What is the difference between a bond and a term deposit?
A bond is a tradeable debt security issued by a government, bank or company; a term deposit is a deposit held with an authorised institution. A bond has a market price that moves with interest rates and credit conditions and is not covered by the Financial Claims Scheme. A deposit has no market price, is generally locked for its term, and eligible deposits may be covered by the scheme. Neither is universally better — they carry different risks.
How long do fixed term investments last?
Term deposits commonly run from one month to five years. Bonds are typically issued with terms of one to ten years or longer, and can be bought in the secondary market with any remaining term. The right term depends on when the capital is genuinely needed.
How is interest paid?
It depends on the product. Bonds commonly pay coupons semi-annually or quarterly. Term deposits may pay monthly, quarterly, annually or in a single payment at maturity. Where interest is only paid at maturity, the investment produces no income during the term.
What happens at maturity?
The term ends, the final interest payment falls due, and the principal — the bond's face value or the deposited amount — is scheduled for repayment, subject to the issuer or institution meeting its obligations. The investor can then reinvest, redirect or withdraw the capital.
Can I access my money before maturity?
Generally not freely. A term deposit may allow early withdrawal subject to a notice period and an interest adjustment set out in the product terms. A bond may be sold in the secondary market where a buyer exists, but the price received depends on prevailing rates and credit conditions and may be less than face value.
Are fixed term bonds guaranteed?
No. A bond is a contractual obligation of the issuer, not a guarantee. If the issuer defaults, investors can lose some or all of their capital. Bonds are not covered by the Financial Claims Scheme simply because they carry a fixed rate or a fixed maturity.
Are term deposits protected in Australia?
Eligible deposits with a covered authorised deposit-taking institution may be protected under the Financial Claims Scheme up to $250,000 per account holder, per institution, subject to the scheme's terms. The limit applies across all eligible deposits with that institution, and several banking brands can operate under the same licence.
What is yield to maturity?
Yield to maturity is the total annualised return from buying a bond at its current market price and holding it to maturity, taking into account the coupon payments and any difference between the purchase price and the face value. It is a more meaningful comparison measure than the coupon rate alone.
Can the value of a bond fall?
Yes. The coupon is fixed but the market price is not. If market interest rates rise, the price of an existing fixed rate bond generally falls; a deterioration in the issuer's credit standing can also reduce the price. A loss is only realised if the bond is sold before maturity, but the price movement is real while it is held.
What affects bond prices?
Principally prevailing interest rates, the issuer's credit standing and credit spreads generally, the time remaining to maturity, and how readily the bond trades. Longer-dated bonds are usually more sensitive to a given change in rates than shorter-dated ones.
Are fixed term investments suitable for income investors?
They are often considered by investors seeking scheduled income, because the payment amounts and dates are set out in advance. Whether they are suitable depends on the investor's objectives, need for access to capital, tolerance for credit risk and overall portfolio position.
Can fixed term investments help diversify a portfolio?
They can provide a defensive or income-oriented allocation alongside equities, property and other growth assets, and their returns are driven by different factors. Diversification reduces reliance on a single source of return but does not eliminate risk, and concentration in a single issuer or institution can undo the benefit.
This information is general in nature and does not take into account any person's objectives, financial situation or needs. It is not personal financial, tax or legal advice. The Financial Claims Scheme applies only to eligible deposits with covered authorised deposit-taking institutions and is subject to its terms and conditions. Fixed-term bonds and other investment products are not automatically covered by the FCS. Tax outcomes, including the availability of any CGT discount, depend on the nature of the investment and the investor's circumstances. Investors should obtain appropriate financial, tax and legal advice before making an investment decision.
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