Buying a share of stock is like buying part of a company—when you buy stock, you become an owner of the company. As the company’s value grows over time, so does the value of your share of ownership, which you can later sell for a profit. Some companies even pay dividends to their stock holders, which can serve as additional income during retirement. On a daily basis, the values of individual stocks fluctuate regularly, but the market as a whole tends to rise over time.

While stocks may fluctuate in value with the rises and falls of the market, bonds tend to provide investors with a slow and steady source of income. Essentially, a bond is an advanced form of an I.O.U. You give a loan to a business, government, or municipality, and in return for your investment, they provide you with regular interest payments for a fixed period of time. When the time runs out, the bond is said to have matured. On maturity, the bond holder is returned the original amount loaned, called the face value. Bonds can increase or decrease in value too, relative to interest rates. A government security is a bond that is issued by a government.

Learn more about Stocks, Bonds and Money Market Instruments.

An annuity is a type of investment product that provides the individual with either a fixed or variable stream on income. They were designed to provide consistent income to individuals during retirement, freeing them from the concern of outliving their assets. Depending on the structure of the annuity, the annuity holder will regularly receive either a fixed payment, or a payment that is tied to the market growth rate.

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Investing in a mutual fund is similar to letting someone else invest your money, while still providing you with returns. Unlike most annuities, the returns on mutual funds are directly tied to the growth and return of the portfolios of stocks that the funds’ managers invest in. Mutual fund managers do not just invest in one or only a few stocks. They spread the investments through a diverse array of stocks, reducing the risk of the investment and providing steadier growth of assets.

Learn more about Mutual Funds.