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Investing Principles

Investment Types

As you begin to formulate an investing strategy, it's important to understand the ins and outs of the many investment options available to you. We've gathered resources in this section to help you do just that.

Here we define the most prevalent investment types in order to help you shape a financial plan.


What is an Annuity? An annuity is a long-term, tax-deferred vehicle designed for retirement. Variable annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½.

Stocks

DEFINITION: By buying a stock, an investor buys ownership in a company and has a claim on part of the corporation's assets and earnings. If the corporation goes under, preferred stock owners receive dividends before common stock owners.

FAST FACTS:

  • The foundation of most portfolios, stocks have historically outperformed other investments over the long term.
  • It's said to be a bull market when the economy and stock prices are up, while a bear market is when they are down.

Bonds

DEFINITION: Buying a bond means an investor is lending money to a corporation or government obligating them to pay the investor a certain amount of interest at specific intervals. The principal amount of the loan is paid back to the investor when the bond matures.

FAST FACTS:

  • Bondholders have no corporate ownership privileges as stockholders do.
  • When interest rates rise, the price of existing bonds decreases, and when interest rates drop, the price of these bonds increases.

Annuities

DEFINITION: An annuity is a long-term vehicle sold by financial services companies that may guarantee a stream of income to the annuitant at some future time, usually at retirement.

FAST FACTS:

  • The tax deferral* feature of an annuity provides the potential for investments to compound tax free over time.
  • Many annuities offer optional benefits like guaranteed income and legacy options.

*Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA. It also may not be available if the annuity is owned by a "non-natural person" such as a corporation or certain types of trusts.

Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity. The long-term advantage of the optional benefits will vary with the terms of the benefit option, the investment performance of the variable investment options selected, and the length of time the annuity is owned. As a result, in some circumstances the cost of an option may exceed the actual benefit paid under the option.


Mutual Funds

DEFINITION: When an individual invests in a mutual fund, that money is pooled with money from other investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. These funds are operated by money managers.

FAST FACTS:

  • Mutual funds give investors the ability to buy and redeem daily.
  • Funds are run by portfolio managers overseen by a Board of Directors who operate for the benefit of the shareholders.

Exchange Traded Fund

DEFINITION: An exchange traded fund (ETF) is a marketable security that tracks an index, a commodity, bonds or a basket of assets like an index mutual fund. Unlike mutual funds, ETFs trade like a common stock on a stock exchange.

FAST FACTS:

  • ETFs experience price changes throughout the day as they are bought and sold.
  • Because these funds typically aren't actively managed, they have low fees making them a low cost option.
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Before investing, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

Jackson® and its affiliates do not provide legal, tax or estate-planning advice. For questions about a specific situation, please consult a qualified advisor.

Annuities are issued by Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. May not be available in all states and state variations may apply. These products have limitations and restrictions. Contact Jackson for more information.

Jackson® is the marketing name for Jackson National Life Insurance Company® and Jackson National Life Insurance Company of New York®.

• Not FDIC/NCUA insured • Not bank/CU guaranteed • May lose value •
Not a deposit • Not insured by any federal agency

CMN16261 09/17

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Jackson National Life Insurance Company
1 Corporate Way
Lansing, MI 48951