Money taken out of your paycheck is typically invested in stock or bond funds, where it grows untaxed until you retire, at which point you pay taxes on it. Typically, your employer will allow you to choose your mix of funds and often will match your contribution up to a certain level. An excellent deal. When you buy a bond, you are lending money to its issuer either a company or the government, federal, state, or municipal, which agrees to pay it back with interest on a certain date, called the maturity date.
Bonds are less safe than bank accounts or money market funds but generally safer than stocks .
Brokerage firm A company that handles your stock trading. When you want to buy or sell shares of a stock, you contact your broker and he or she arranges it. The brokerage firm also provides you with statements that you ll need at tax time. Brokerage firms focus on individual stocks and bonds. Some brokerage firms offer mutual funds , but you'll generally pay more than you would at a low-cost mutual fund company.