For many consumers the decision to invest can be a difficult one. With so many options available, so many banks and corporations offering investment terms, the process can be such a headache many will simply not invest. This however would be a huge mistake, investments are for everyone and for the right investor the payoff can be huge.

For this article we will be looking at the most simple two types of investments, the fixed annuity and the mutual fund. No need to memorize letters and numbers such as 401(k) we will easily explain each detail so that the reader has a much better idea afterwards.

Let us begin with the fixed annuity. An annuity is a type of deal in which a person gives a company (most commonly an insurance company) money as an investment and earns interest on this investment. The investment can then be returned in several ways, through fixed income amounts throughout the persons lifetime, and others. This is a viable option because it guarantees a fixed income throughout the persons life, then a lump sum payment to the surviving relatives upon the persons death. The reason it is called a "fixed annuity" is that the interest rate is fixed and not variable to the market rate. The advantage to this process is that the interest rate will never go up and down with the economy, the disadvantage is that it is typically a lower interest rate than the variable rate at the moment.

Another important feature of annuities is taxation. Under current government law fixed annuity amounts are not taxed, unless funds are being withdrawn. Once funds are withdrawn and the person is over the age of 59 a 10% tax is subject to the amount. Also, even though the amount that the annuity gains over it's lifetime is not taxed, the amount the lump sums given to relatives after one has died is. Specifics for these fees vary by bank and lender, and should be checked out.

On the other hand mutual funds take a different approach to investing money. These are managed by a professional investment manager, and contain a number of different investments designed especially not to fluctuate as harshly as individual stocks. With this in mind many people invest in one group, and see slight returns based on it. If one stock in the fund goes down the chances for losing less money drop dramatically. However, unlike annuities these dividends are taxed.

Either way you look at it though, investment makes sense. Whether you are investing for retirement, safety and security or your families future the way to do it is through annuities or mutual funds. These funds have guaranteed benefits, with very minimal loss. If your bank currently consists of your two mattresses, it may be time for you to switch today!