How to Invest in Securities

   

What is a Securities Investment?

Loosely defined, a security in the world of finance is an instrument representing financial value. Securities can be categorized as debt, equity or derivative securities and can be represented through a certificate or non-certificated book entry form. These certificates entitle the holder to rights under the security and can include shares of stock, mutual funds or bonds.

Investing in Securities

Debt securities, or bonds, refer to a type of loan in which the investor lends an institution money in return for the payment of at certain intervals. Bonds can be issued by credit institutions, government agencies and public authorities with the initial lending amount agreed to be repaid at a later date. Bonds are a reliable securities investment because they generate a fixed form of income through interest. Equities refer to the amount of ownership you buy in a company and can be purchased in the form of stock and dividends. Derivative contract securities derive their value from direct securities in the form of futures, swaps, options and index options.

There are two types of markets to consider when investing in securities: primary and secondary. In the primary market, the money for securities is received from investors in a public offering transaction, such as offering stock to the public. In the secondary market, the securities are assets held by one investor selling them to another investor. The secondary market must exist for the primary market to thrive because holders of securities are able to sell them for cash in the secondary market to other investors. For this reason, investing in securities oftentimes comes with organized exchanges to perpetuate both markets.

If you’re interested in investing in securities, it is worthwhile to check out the latest news and trends surrounding the form of securities you have invested in. InvestorPlace offers the latest news on securities and trends, as well as expert perspectives on the market today. Check out what our industry leaders have to say about securities investment by looking through InvestorPlace today!