We Ranked the Best Fixed-Income Assets by How Well They Actually Protect Your Money

This article is produced with a commercial partner. The rankings and the reporting are ours. The Ranking is a recurring column; the name is deliberately currency-neutral so it reads the same in every country we open.

The headline yield on a fixed-income product is the least interesting number attached to it. It tells you what you are promised, in a currency whose value is the actual variable.

The number that matters is what is left afterwards. Here is how the common options rank on that basis.

The method, briefly

For each instrument we looked at three things: the stated return, the realistic holding period including any lock-up, and the ease of getting out early without destroying the return. Then we asked the only question that matters, does this beat inflation over the period you can actually commit to?

1. Government treasury instruments

Protection: strong. Liquidity: moderate.

The benchmark everything else is measured against. The return is rarely exciting and the point is that it is rarely surprising either.

The catch is duration. The rate you lock is the rate you have, and if inflation moves against you mid-term there is no adjustment mechanism. Ladder the maturities rather than committing everything to one date.

2. Commercial paper from established issuers

Protection: good. Liquidity: poor.

Better yields than treasuries, and the credit risk is real but assessable if you stay with issuers who have been around through a downturn. The secondary market is thin, so treat the maturity date as genuinely binding.

3. Money market funds

Protection: moderate. Liquidity: excellent.

The right home for money you might need. Not the right home for money you are trying to grow, the yield reflects the convenience.

Useful as the holding pen between decisions rather than as a decision.

4. Fixed deposits

Protection: moderate. Liquidity: poor.

Simple, understood, and usually the weakest real return of the group once you account for what breaking it early costs. The convenience is that it requires no thought, which is worth something, but it is worth less than the gap.

5. Dollar-denominated instruments

Protection: strong against local inflation. Introduces a different risk.

You have not removed risk here, you have swapped it. That is sometimes the correct trade, particularly if your future spending is partly in that currency, but it should be a deliberate position, not a panic.

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The uncomfortable summary

Over most recent periods, several of these have delivered a positive nominal return and a negative real one. That is not an argument against fixed income. It is an argument against treating fixed income as the whole portfolio, and against reading the headline number as though it were the outcome.