🔍 Types of Securities

Securities come in a few main categories, each serving different purposes:

📈 Equity Securities

These represent ownership in a company. The most common example is stock (or shares), which gives the holder a claim on part of the company’s assets and profits. Some stocks also pay dividends, and holders may have voting rights in shareholder decisions.

💵 Debt Securities

These represent a loan made by the investor to the issuer, typically in the form of bonds. The issuer (like a corporation or government) agrees to pay back the principal with interest over time. Debt securities are generally considered lower risk and lower return compared to stocks.

🔀 Derivatives

These are contracts whose value is derived from another asset (the “underlying”), such as a stock, index, or commodity. Common derivatives include options, futures, and swaps. They are often used for hedging or speculation and can carry high risk.

🧠 Why Securities Matter

Securities are the tools investors use to participate in the financial markets — to build wealth, manage risk, and support businesses. For companies and governments, issuing securities is a way to raise capital to fund growth, operations, or infrastructure.

Markets would not function without securities. They are the connective tissue between investors, institutions, and issuers, enabling the global flow of capital.

🛡️ Regulation of Securities

In the U.S., securities are regulated by the Securities and Exchange Commission (SEC). The SEC ensures that companies disclose accurate financial information, and that trading is fair, transparent, and free of manipulation.

To be legally offered to the public, most securities must be registered with the SEC, unless they qualify for an exemption (such as private placements).

🧠 Things to Remember

• A security is any financial asset that can be bought, sold, or traded — including stocks, bonds, options, ETFs, and more.
• Securities fall into broad categories: equity (ownership), debt (lending), and derivatives (contracts).
• They are essential for both investors seeking returns and companies seeking funding.
• Not all investments are securities — for example, real estate or collectibles are not, unless tokenized or bundled into tradable forms.
• Securities are regulated to protect investors and promote market confidence.

Securities are the core instruments of modern investing — whether you’re building a retirement portfolio or trading options on your lunch break, you’re working with them every step of the way.