A contract in which an insurance company guarantees a fixed or variable periodic payment to an annuitant at some time in the future, usually retirement, for a stated period of time. The division of assets among different categories of investment funds. Asset allocation is an important concept in personal financial planning and investment management because it affects both risk and return. This kind of fund usually invests in a mixture of stocks and bonds. A certificate of debt issued by a corporation, government or municipality.
Investors usually purchase bonds for the interest payments they generate from the issuer.
An estimate of income and expenses for a specified period. The process of applying a stated rate of return to both the principal and the accumulated interest over time. Compounding can be computed annually, semiannually, quarterly, monthly or daily. A retirement plan in which each employee's benefit is determined by a formula stated in the plan. In some cases, employees may make voluntary contributions, which may or may not be matched by employers.