For decades, investors building a fixed-income investing strategy have relied on high-yield savings accounts and certificates of deposit (CDs). They use these tools for stability, liquidity, and capital preservation—and for good reason. These traditional income investments remain reliable, especially in uncertain markets.
However, as interest rates fluctuate and volatility reshapes the broader financial landscape. Limiting your income strategy to these options may mean accepting lower yields and unintended concentration risk. Today’s fixed-income markets are evolving, and many investors are beginning to look beyond banks to diversify their portfolios and enhance passive income. They are exploring alternatives like private market investments and real estate-backed notes to capture more attractive, risk-adjusted returns.
The Challenge with Traditional Fixed Income
Even with higher interest rates in recent years, many traditional bank products still deliver relatively modest returns. As of early 2026, here are the national averages of common savings products:
1 Federal Deposit Insurance Corporation (FDIC). National Rates and Rate Caps.
2 Wall Street Journal Buy Side. High-Yield Savings Rates Today. March 13, 2026.
These products offer safety and easy access to cash. However, their yields are closely tied to Federal Reserve policy and the broader banking environment. When rates decline, returns on savings products often follow, which we have especially seen in recent years. Investors increasingly use alternative fixed-income investing to diversify their portfolios.
Is the 60/40 Portfolio Changing?
The traditional 60/40 allocation has guided portfolio construction for decades. Investors typically allocate 60% of a portfolio to equities for growth and 40% to fixed income for stability. The strategy aims to improve diversification; combining assets that do not move together can improve long-term risk-adjusted returns.
Historically, the approach worked well. During the 1980s, when interest rates began a long period of decline, a 60/40 portfolio produced strong results with annual returns approaching 16%. In the decades that followed, Stocks and bonds became more correlated, though correlations remained relatively low. The strategy continued to deliver solid results, producing roughly 8% annual returns through the 1990s and 2000s.
Over the last decade, the relationship between these asset classes has changed. Stocks and bonds have increasingly moved in the same direction, particularly during periods of market stress. Fixed income has also struggled to deliver the level of income many investors expect from the asset class. As a result, investors and advisors have begun adding additional asset categories to improve diversification.
This shift has driven the growth of alternative investments and private market strategies. Many portfolios have evolved from a traditional 60/40 allocation into structures such as 60/30/10 or 50/30/20, where investors allocate a portion of capital to alternatives including private credit and real estate lending.
Private market investments introduce a return stream that is less correlated with public equities and traditional bonds. In some cases they can also offer higher income potential. Investors are increasingly using structured notes and real estate-backed lending products as part of this broader diversification strategy.
Groundfloor Notes in a Diversified Portfolio
Groundfloor Notes represent one example of how private market credit can complement traditional fixed-income investing strategies. Notes are backed by real estate loans originated through its platform, and they have delivered a 100% on-time payment record of principal and interest since launch.
Compared with many traditional fixed-income or cash equivalent products, Groundfloor Notes often offer yields that are two to three times higher. Real estate assets collateralize the notes and represent the senior obligation of the issuing company, which has operated for more than 13 years.
Since launching its investment platform, Groundfloor has maintained a strong repayment record on its notes and had a record-breaking year in 2025. The company has never defaulted on a note and has never been late or reduced a scheduled payment. Most notes are short duration, typically twelve months or less, and many provide monthly income to investors.
Investors can also build a laddered or “stacked” note strategy to manage liquidity and cash flow. For example, an investor might hold a Signature Note for consistent monthly income while allocating additional capital into one- and three-month notes that mature on a rolling basis. This approach helps maintain steady payments while allowing investors to redeploy capital as notes mature.
How to Use Note Laddering as a Passive Income Strategy
Investors are increasingly building note ladders to hold positions at different term lengths so capital is always rotating and generating income.
For example: an investor holds a mix of 1-month and 3-month notes rolling on a regular cycle, alongside a longer-term position that pays monthly income. As short-term notes mature, Investors redeploy capital into new positions at current rates. This creates a steady cadence of returns without locking everything up at a single term.
It’s a similar concept to a CD ladder but with two differences: the yields are materially higher, and the underlying collateral is comprised of real assets.
For investors looking to generate consistent passive income without long lockup periods, note laddering is one of the most practical strategies available in private market fixed-income investing today. See current Note rates.
Groundfloor’s 9.25% Preferred Note
Groundfloor’s Preferred Note offers accredited investors a way to participate in real estate-backed lending through a fixed-income structure. Groundfloor opens availability for the Preferred Note periodically. Accredited investors can sign up for a Groundfloor account and verify their accreditation status to join the notification list to to receive alerts when the next offering opens.
The Preferred Note includes a 9.25% fixed return on a 6-month investment term.
The underlying loans typically support residential real estate projects such as property renovations and development. Real estate secures these loans, creating a collateral-backed structure for the note. Since launching Notes in 2013, Groundfloor has a perfect track record, repaying full principal and interest to investors on time.
The Case for Real Estate-Backed Fixed Income as a Passive Income Strategy
Not all private credit is structured the same way, and that distinction is important. Some widely discussed private credit products rely on layered financial structures, embedded leverage through insurance vehicles, or complex fund-of-funds arrangements. Recent situations, such as the pressure observed in vehicles like Blue Owl OBDC II, illustrate how these structures can behave when underlying assumptions are tested. In contrast, real estate-backed notes are based on direct lending secured by physical property, including residential renovations, development projects, and similar collateral-backed assets.
The underlying loans generate returns rather than from multiple layers of financial engineering, which can lead to different risk and return characteristics, particularly in less stable market conditions.
Groundfloor built its platform around short-term residential real estate loans that fund property improvements, construction, and redevelopment. The underlying properties secure these loans and are generally structured with shorter investment durations. By pooling loans originated through the Groundfloor platform, Preferred and Signature Notes provide investors with access to income derived from real estate lending through a simplified, transparent structure.
For investors considering alternatives to traditional fixed-income products, this approach offers exposure to private real estate credit markets, fixed returns over a defined investment term, and diversification beyond traditional banking products.
Fixed Income Diversification in a Changing Market
Periods of market volatility always reinforce the importance of diversification within a portfolio. While CDs, savings accounts, and bonds remain core components of many investment strategies, investors are increasingly incorporating private market credit to broaden their sources of income, often with higher-yields than traditional fixed-income investing products.
Real estate-backed notes can play a role in a fixed-income investing approach by providing exposure to property-secured lending and income generated outside traditional banking channels.
The Bigger Picture: Why Private Market Investing Matters in 2026
Fixed-income investing is evolving. The assumption that a reliable passive income stream can be built entirely from bank products and public bonds is being challenged by a market where correlations increase during periods of stress, yields compress as monetary policy shifts, and inflation reduces real returns. In response, private credit has emerged as part of a broader reassessment of portfolio construction.
As traditional fixed-income assets deliver lower yields and less diversification than in prior cycles, investors across institutional and individual segments are allocating to alternative income sources. Groundfloor has been providing access to this segment since 2013. For investors seeking a straightforward entry point, Notes offer a way to incorporate private real estate credit into an income strategy. Groundfloor’s Preferred Note, for example, provides a six-month investment with a 9.25% fixed annualized return. Supported by real estate lending activity on the platform, the Preferred Note is a smart addition to diversified fixed-income portfolios.
