📈 What are securities?
Securities are documents or digital records that prove your rights to certain assets or obligations. Simply put – they are “papers” (or numbers on a screen) that you can buy, sell or hold to make money.
Main Types of Securities
1. Stocks – a share in a company
What is it?
When you buy a stock, you become a (minor) owner of the company.
How do you make money?
- The stock price goes up – sell it higher than you bought it.
- The company pays dividends – a share of profits to shareholders.
Example: bought Apple stock? You now own a piece of Apple.
Bonds – an IOU
What is it?
You lend money to a company or government, and they promise to repay it with interest.
How do you make money?
- You receive regular interest payments (coupons).
- You get your full money back at the end of the term.
Example: you lend $1000 at 5% annual interest – get $1050 in a year.
Mutual Fund Units
What is it?
You pool your money with others into a fund that professionals use to invest in stocks, bonds, etc.
How do you make money?
- The unit price rises as the fund performs well.
- You may receive dividends or interest payments.
Example: don’t want to pick stocks yourself? Let the fund do it for you.
4. Depositary Receipts (ADR/GDR)
What is it?
A way to buy foreign stocks via your local exchange. Example: buy Amazon stock in your country.
How do you make money?
Same as with regular stocks – price growth and dividends.
5. Derivatives (options, futures)
What is it?
Contracts that give you the right (but not obligation) to buy or sell an asset at a fixed price in the future.
How do you make money?
You bet on price changes without owning the asset.
Note: complex instruments – not for beginners.
Why invest in securities?
- To grow your wealth.
- To protect against inflation.
- For passive income (dividends, interest).
- To support companies and economies.
How to start?
- Define your goals and risk level.
- Learn the main types of securities.
- Choose a reliable broker.
- Start simple – large-cap stocks or mutual funds.
- Expand your portfolio gradually.
💡 Moral: Securities aren’t just complex charts and jargon – they’re practical tools to build and protect wealth. Learn slowly, invest wisely.
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