Stocks are an equity investment that represents part ownership in a corporation and entitles you to part of that corporation's earnings and assets. Common stock gives shareholders voting rights but no guarantee of dividend payments. Preferred stocks provides no voting rights but usually guarantees a dividend payment. In the past, shareholders received a paper stock certificate -- called a security -- verifying the number of shares they owned. Today, share ownership is usually recorded electronically, and the shares are held in street name by your brokerage firm. Investing in stocks can be tricky business. In fact, it's best to treat all of your investment pursuits as a business.

A bond, also known as a fixed-income security, is a debt instrument created for the purpose of raising capital. They are essentially loan agreements between the bond issuer and an investor, in which the bond issuer is obligated to pay a specified amount of money at specified future dates. There are four major bond types in the U.S. markets, which are represented by four major issuers: How do Bonds work? When an investor purchases a bond, they are "loaning" that money (called the principal) to the bond issuer, which is usually raising money for some project. When the bond matures, the issuer repays the principal to the investor. In most cases, the investor will receive regular interest payments from the issuer until the bond matures.

An individual retirement account (IRA) is a tax-advantaged investing tool that individuals use to earmark funds for retirement savings. There are several types of IRAs as of 2019: traditional IRAs, Roth IRAs, SIMPLE IRAs, and SEP IRAs. Sometimes referred to as individual retirement arrangements, investments held in IRAs can encompass a range of financial products, including stocks, bonds, ETFs, and mutual funds. A self-directed IRA is a type of traditional or Roth IRA that allows investors to make all of the investment decisions for their account and affords access to a broader range of investments, such as real estate, private placements, and tax liens.