Learn More About Investment Products

Every investment product is different and has its pros and cons. Get the details to help decide which investment product is right for your wealth-building goals.


An annuity is a financial product generally used during retirement that provides a series of payments at equal intervals, typically monthly or annually, over a specified period or the duration of an individual’s life. An individual pays a lump sum or a series of payments (premiums) to an insurance company or financial institution to purchase an annuity.

There are two types of annuities: immediate, which pays right away, and deferred, which pays in the future. Some benefits of annuities include regular payments through a fixed period or having the remainder of payments made to a beneficiary in the event of a death. Of course, there are risks too, like significant penalties for early withdrawal. They can also be difficult to understand with complex forms, terms, rules, and fees.

Bank Products

Many banks offer investment products in the form of specialized savings accounts. These include Certificates of Deposit, Money Market Accounts and High-Yield Savings Accounts.


When you purchase a bond, you are lending money to the bond issuer (a government, corporation, or other entity) in exchange for periodic interest payments and the return of the bond’s value at its maturity date. Benefits can include periodic and fixed interest payments to the bondholder. Bonds also typically have lower risks than other investments. On the other hand, risks of bonds can include low returns or even no growth. Lower-rated bonds have the possibility of the bond issuer’s default.

Certificate of Deposit

Certificates of Deposit (CD) are like savings accounts except you’re saving a lump sum of money for a specific term length. CDs earn higher interest than normal savings accounts, paid at regular intervals, such as monthly or quarterly, but you can’t withdraw money during your term length without taking a penalty. CDs are usually a good option for people looking to make a big purchase at a future date and are typically safe and predictable investments. But there are many different CDs out there, so be sure to do your research.


Commodities are raw materials like agricultural products (corn, wheat), energy resources (oil, natural gas), metals (iron, gold, copper), or even financial instruments like futures and contracts. Benefits include portfolio diversification and hedging against inflation and economic uncertainties, but there are also risks. Commodities are very complex and speculative. Their value is heavily influenced by changes in supply, technology, geopolitics, and currency fluctuations. Because they can be so complex, it’s best to talk to a third party like an investment advisor first.

Crypto Assets

The term “crypto assets” refers to a digital asset, which may be a medium of exchange for which generation or ownership records are supported through blockchain technology. Common issues consumers face are understanding how crypto assets work and their worth. There may be potential for big returns with crypto assets, but they’re also not regulated to the same extent as U.S. dollars and products that use U.S. dollars. This means crypto markets are more susceptible to scams.

Do your research on crypto assets on our DFPI crypto page or download our free Protect Yourself From Fraud booklet for more detailed information.


Exchange Traded Funds (ETF) are investment funds that hold a diversified portfolio of assets (stocks, bonds, commodities, etc.) or a combination of different securities. Like stocks, ETFs are traded on stock exchanges. The benefits of ETFs are that they have relatively low fees, there’s transparency involved along with high liquidity. They are also a way to diversify your investments. But since they are a portfolio of stocks, bonds, commodities, etc. they are also subject to market conditions, economic trends and current events. Do your own research and talk to an investment advisor about ETFs that may work for your portfolio.


A futures contract is an obligation to buy or sell a specific commodity at a future date and price. Futures can help limit the risk of an investor but it’s best to consult an investment advisor before making any decisions.

Money Market Accounts (MMA)

This is a savings account at a bank or credit union that pays more interest than regular savings accounts. You may be able to write checks or use a debit card with this account, but there could be limits to the number of withdrawals allowed.

Mutual Funds

This investment pools money from multiple investors to purchase a portfolio of stocks, bonds, or other securities. These funds are managed by professional “fund managers” who make investment decisions for the fund’s shareholders.

The benefits of mutual funds can include automatic diversification and high liquidity. Mutual funds are also professionally managed, relieving the investor of this duty. There are also risks associated with mutual funds, such as incurring management fees, the susceptibility of the fund to market volatility, management decisions, and even current events that may affect markets.


An option derives its value from other financial products. With an options contract, an investor has the choice but is not obligated, to buy or sell shares at a set price before the contract ends. You are basically buying the option to buy or sell. Owning an option does not mean you own a security, like a stock or bond. You cannot receive dividends on options.

Real Estate

This involves investment in a tangible property or asset such as land, buildings, etc., and the purchase, ownership, management, rental, or sale with the expectation of generating income, capital appreciation, or both. If you’re thinking of investing in real estate, consider the risks and benefits. Benefits include receiving supplemental income through rent, value appreciation over time, tax advantages, and physical ownership of a property. Risks may include taking out loans for purchase or property value fluctuations based on location, market conditions, economic trends, and local/state government policies.


Securities are tradable assets that represent ownership in a financial instrument. They allow investors to buy, sell, and trade financial assets in capital markets, which can help with investment and risk management. They can be broadly categorized into two main types: equity securities and debt securities.

Examples of the most common financial securities include stocks, bonds, mutual funds, exchange-traded funds (ETF), and derivatives.


Owning stocks means you have shares of ownership of a company, its assets, and earnings. There are different types of stocks, including common stocks and preferred stocks.

Benefits of stocks can include voting rights, dividends, capital appreciation, high liquidity, etc. But there are risks involved, too. The price of a stock is subject to market volatility, conditions, and economic trends. Leadership decisions may also affect its performance which can affect its value. Do your own research and get guidance from a third-party like a registered, experienced investment advisor before you invest in any stocks.

Follow Us on Social Media

The DFPI Facebook
The DFPI Twitter
The DFPI's LinkedIn profile
The DFPI YouTube channel

Funded by a grant from the Investor Protection Trust.