Good question. And though zillions of books have been written about this, the basics are hardly rocket science.
You can invest in stocks and bonds in one of two ways: by buying them individually or by buying them via a mutual fund. A mutual fund is simply a collection of stocks, or bonds, or cash equivalents - or sometimes a mix of all three.
Some people also invest in "hard assets" like real estate or gold, but those aren't always great choices for the average person's retirement account.