Securities Investment
A security is a fungible, negotiable instrument representing financial value. The company or other entity issuing the security is called as issuer. Securities include shares, mutual funds, bonds issued by corporations or government agencies, stock options, limited partnership units and various other formal investment instruments that are negotiable and fungible. They give you the rights as a shareholder or investor. When a government or a company requires money to finance some special projects or to provide some services, it can borrow from lenders or issue securities. An investor can buy such securities in a hope to get back the profit or income if that investment scheme works out. Securities are the certificates or documents that show you have an interest in the capital, assets, property or profits of a company or business. In securities investment three parties are involved such as the issuer, the investor and the broker. He issuer is the organization that offers the securities for sale. The investor is the party buying securities which may be bank, a trust company, a pension plan, a mutual fund manager or any individual etc. And the broker is the mediator between issuers and investors.
There are different types of securities but mainly are Equity securities, Debt securities and Mutual fund shares or units. Equity securities include common or preferred shares which entitles the owner with a portion of the profits gained. However, equity generally entitles the holder to a pro rata portion of control of the company, meaning that a holder of a majority of the equity is usually entitled to control the issuer.
Debt securities include bonds and debentures which make the investor a lender to the issuer or company. Debt securities generally offer a higher rate of interest than bank deposits, and equities may offer the prospect of capital growth. Debt securities may be called debentures, bonds, deposits, notes or commercial paper depending on their maturity and certain other characteristics. Mutual fund shares or units allow an investor to pull the money together with many other investors. Other types of securities may include limited partnerships in real estate or films, some education saving plans, oil and gas leases, gold, silver and foreign currency etc.
All securities carry some risk. Some investments have more risk than others. You just need to know the level of risk that is appropriate for you. Except in unusual circumstances securities should only be sold by brokers who are registered with the Administrator. Brokers help find investments which meet your financial goals. The commission costs they charge you depend on the services they offer. A full service broker sells most types of securities. It acts as an advisor by providing you with information about the investment and by helping you to make your security selection. Securities are often listed in a stock exchange, an organized and officially recognized market on which securities can be bought and sold. Issuers may seek listings for their securities in order to attract investors, by ensuring that there is a liquid and regulated market in which investors will be able to buy and sell securities.