The variable annuity lets you increase your return by using a mixed portfolio of underlying investments typically, stocks, bonds and money market funds. In this set-up, the inflation risk is minimal. However, the eventual distributions in retirement from a variable annuity could vary substantially, since the value of the annuity units you have purchased fluctuates according to the value of the underlying portfolio. Since the fixed annuity offers a guaranteed rate of return by the issuing insurance company, it is generally considered conservative and stable. As a trade-off for this stability, the investor risks a loss of purchasing power due to inflation.
Shares of stock represent ownership in a company.
How much investors own depends on how many shares they have purchased, in relation to the total number of shares that have been issued. Owners of common stock get to vote on key issues affecting the company, for example, selecting its board of directors. Common stock shareholders are the last group to be receive a share profits of the company's profits. However, if the company does well, they are likely to profit most from its growth. Preferred stock owners are entitled to be paid any dividend or compensation before the owners of common stock.