What The Difference Between Mutual Funds And Annuities? 
There 's a big difference between the two . A mutual fund is an investment vehicle operated by an investment company which pools the assets of many individuals . The money raised is then invested in accordance with pre-defined goals . Money market funds : These funds invest in a variety of short term , money market debt such as Treasure bills or commercial paper . Growth funds : have an emphasis on long-term capital growth , usually through investment in common stock . Income funds : Focus on providing high , current income , using bonds and other income producing securities . Balanced funds : strive to provide income and long-term capital gain . Both stocks and bonds are used . Keep in mind that mutual funds have risk and you can lose money.Non-qualified tax deferred annuities have basically three crediting methods : interest rate crediting , indice crediting and separate sub account crediting . Interest rates are generated by the companys predominately government bond portfolio . Most indexed annuities invest their interest rate returns in domestic and foreign index options . Some indexed annuities that credit zero in a given year , still charge policy expenses and which could result in a loss . Variable annuities use equity and bond instruments in their separate sub accounts selected by the variable annuity owner . These separate sub account allocations are subject to market risk , i.e. you can lose money . 