Rente
In short
An annuity is a series of regular payments made at equal time intervals, often used to provide a steady income during retirement.
In plain words
You give a large sum of money to a company, such as an insurance provider. In return, they pay you back smaller amounts of money every month or year for a set period or for the rest of your life.
A simple example
A person pays £100,000 to an insurance company upon retiring. The company then pays that person £500 every single month for the next twenty years.
Why it matters
It helps people manage the risk of outliving their savings. It turns a single pile of cash into a predictable, lifelong income stream.
Easy to mix up
Do not confuse it with a simple loan, where you receive money and must pay it back with interest.