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Types of Investments

Types of Investments

Investment Types

One important factor in retirement preparation is choosing options in which to invest. Because each investor has different goals and different circumstances, there is no set strategy that works for everyone. However, having a better understanding of the basic types of investments can help you determine a strategy that may be suitable for you.

Asset Classes

Most investment options will fall into one of three broad groupings of investment types, called asset classes. Options within an asset class tend to exhibit similar characteristics and behave in a similar way in the markets.

 

Overview

Risk & Return

Other info
Stocks
  • Signify ownership in a corporation
  • May invest in many different companies at varying levels
  • Highest potential investment returns over time
  • Highest amount of risk to principal
  • If the company does well and its stock price increases, investment could increase in value.
  • If the stock goes down in price, it may lose money.
Bonds
  • An investor loans money to an entity
  • Loan is for a defined period of time
  • Typically moderate risk level
  • Dependant on the financial strength of the issuer
  • Used by companies, municipalities, state/U.S. and foreign governments
  • Finance a variety of projects and activities
Cash Equivalents
  • Investment securities that are short-term
  • Have high credit quality
  • Are highly liquid
  • Low-risk
  • Low-return

 
  • May include U.S. government Treasury bills
  • May also include bank certificates of deposit and other money market instruments

Asset Allocation Funds

Asset allocation funds are investment options that provide investors with a portfolio of a fixed or variable mix of the three main asset classes.

Asset allocation fund types:

  • Balanced funds: Generally, a “balanced fund” implies a fixed mix of stocks and bonds (such as 60% stocks and 40% bonds.)
  • “Life-cycle” or “target-date” funds: These usually have a mix of stocks, bonds and cash equivalent securities that start out with a higher risk-return position and gradually become less risky as the investor ages.
  • “Life-style” or “target-risk” funds: The fund manager of one of these options actively manages the underlying asset classes in response to market conditions to maintain a risk level that is consistent with that of the original objective (typically either conservative, moderate or aggressive).

Use our Asset Allocation Calculator to find a mix of these investment types that may be suitable for you

Notes: 

Target Date Funds are designed for people who plan to retire and begin taking withdrawals during or near a specific year. These funds use a strategy that reallocates equity exposure to a higher percentage of fixed investments; the funds will shift assets from equities to fixed-income investments over time. As a result, the funds become more conservative over time as you approach retirement. It’s important to remember that no strategy can assure a profit or prevent a loss in a declining market and the principal value of the Target Date Funds is not guaranteed at any time, including the target date. Target Date Funds are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Target Date Funds, an investor is indirectly paying a proportionate share of the applicable fees and expenses of the underlying funds. The principal amounts invested into these funds are not guaranteed at any point and may lose value. The use of asset allocation does not guarantee returns or insulate you from potential losses and diversification does not assure a profit and does not guarantee against loss in a declining market.

Any investment involves risk and there is no assurance that the investment objective of any investment option will be achieved. Before investing, understand that variable annuities are subject to market risk, including possible loss of principal.

Group annuity contracts are issued by American United Life Insurance Company® (AUL) and registered variable annuity products are distributed by OneAmerica Securities, Inc., a Registered Investment Advisor, Member FINRA, SIPC, One American Square, Indianapolis, IN 46282, 1-877-285-3863.

McCready and Keene, Inc. and OneAmerica Retirement Services LLC provide administrative and recordkeeping services and are not brokers/dealers or an investment advisors. Neither AUL, OneAmerica Securities, McCready and Keene, OneAmerica Retirement Services nor their representatives provide tax, legal or investment advice.

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