Investing Terms Explained and Retirement Options Outlined
Bonds are pretty basic and are considered fixed income investments because you are only going to make the amount of money determined at the time you purchase the bond. In reality they are no different than a CD except it is the government or corporation that is issuing the bond. If you have $1,000,000 to invest and you want a specific income each year you could purchase government bonds that pay a ‘fixed’ 5%, earning you $50,000 per year on the bond.
Stocks are a way for you to own part of someone else’s business and benefit from the company’s prosperity. The stock rises and falls in value depending on the performance of the stock itself. Stocks don’t in and of themselves produce an income unless the company pays out dividends to its share holders. You simply hold the stock until it reaches a value you deem desirable.
Mutual Funds are a way for multiple people to come together and use their cumulative money to purchase stocks or bonds or any other investing vehicle the fund manager thinks is relevant. You can have tech related mutual funds, agricultural or even purchase structured settlement funds. Essentially you are turning your money over to a professional to make the investment choices for you.
The last type of investing vehicle would be classified as ‘retirement accounts,’ this is where a lot of people purchase structured settlements to provide long term guaranteed income. This is where certain strategies are used to produce specific results. The best retirement plans are the ones that have time on their side, but it is possible to manage money to give you consistent income now, as opposed to waiting for it to mature. Long term retirement accounts are often tax deferrable, meaning you don’t pay any taxes on the gains until you withdraw the money at the predetermined time, usually 30 years or more.