The term security refers to a financial instrument that holds some type of monetary value.
It represents and ownership position in a number of different investment types, such as stocks, bonds, investment contracts and derivates.
As an example, a security can represent ownership in a corporation through stock or in the form of a bond.
Securities themselves are fungible and tradeable and are used to raise capital in public and private markets.
You will generally find three primary types of securities.
These include:
Equity, which provides ownership rights to holders
Debt, which refers to loans being repaid with regular payments
Hybrids, which combine aspects from both equity and debt
Securities form the basis of most investment portfolios and are therefore a fundamental concept for investors to understand when building their own diversified and balanced investment portfolio.