securities
Tradable financial assets such as stocks, bonds, and options.
Example
“Her brokerage account held a mix of securities including stocks and government bonds.”
Memory Tip
SECURITIES provide financial SECURITY — they represent a legal claim on an asset or income stream.
Why It Matters
Understanding securities is crucial because they represent ownership stakes or debt obligations that can grow your wealth over time. Most people build long-term financial security through a diversified portfolio of securities, making knowledge of how they work essential for retirement planning and wealth accumulation.
Common Misconception
Many people believe that all securities are equally risky or that stocks are the only type of security worth owning. In reality, securities exist on a spectrum from very safe bonds issued by stable governments to highly volatile penny stocks, allowing investors to choose based on their risk tolerance.
In Practice
Suppose you have 5000 dollars to invest. You might purchase 2000 dollars in corporate bonds earning 4 percent annually and 3000 dollars in stock shares of a diversified index fund. Over five years, the bonds would generate roughly 400 dollars in interest while the stocks might double in value depending on market conditions, demonstrating how different securities serve different roles in a portfolio.
Etymology
From Latin 'securus' meaning 'free from care' — financial instruments that provide a secure claim on assets.
Common Misspellings
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Related Terms
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See Also
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