What Is a Security? (2024)

Ever come across the word “security” while Googling how to invest and felt a bit confused?

Securities in investing and finance

What is a security? No, securities don't have anything to do with protecting your passwords or installing a hidden camera in your home. In the investing sense, securities are broadly defined as financial instruments that hold value and can be traded between parties.

In other words, security is a catch-all term for stocks, bonds, mutual funds, exchange-traded funds or other types of investments you can buy or sell. What it’s not: Tangible assets you might own, like your car, a home or even a bar of gold.

Types of securities

There are a few different types of securities. The two most common types of securities you’re likely to come across are equity securities and debt securities.

Equity securities

Equity securities generally refer to stocks, which are shares that you purchase in a company. When you buy an equity security, you own a piece of the company and have a stake in how the business performs. Stock performance moves up and down based on many factors, including how the economy is doing, how the business itself is doing, what’s happening in the world and other events you can’t really predict or control. There is risk involved with investing in stocks because they can be volatile.

Debt securities

Debt securities, also called fixed-income securities, generally refer to bonds, and they are what they sound like: investments in debt. When you buy a debt security you’re essentially lending money to a company or government entity. In return, you get periodic fixed-interest payments (hence where the term “fixed income” comes from) and you can get your full loaned amount back if you decide to hold onto the bond until its “due” date, better known as its maturity date. Certificates of deposit and other sources of fixed income can also be considered debt securities.

Although bonds are largely seen as safer investments than stocks, truth is they do come with risk — for example, the chance that the issuer of the bond could default, which means they may not be able to repay you. Also, if a bond's interest rate doesn't keep pace with the rate of inflation, Also good to know about bonds: Bond prices move in the opposite direction of interest rates, which means that when interest rates rise, bond prices typically fall, and vice versa. So what’s happening with interest rates will affect the value of your bonds and what you to decide to do with them as part of a larger investing strategy.

Bottom line: The next time you hear the word securities, no need to get confused. Just think of them as a fancier way of saying stocks and bonds.

No investment strategy can guarantee a profit or protect against loss. All investing carries some risk, including loss of principal invested.

Past performance is no guarantee of future results. Examples are for illustrative purposes only and not indicative of any investment.

What Is a Security? (2024)

FAQs

What is enough security? ›

Definitions: Security commensurate with the risk and the magnitude of harm resulting from the loss, misuse, or unauthorized access to or modification of information.

What is security in answer? ›

Security is protection from, or resilience against, potential harm (or other unwanted coercion). Beneficiaries (technically referents) of security may be persons and social groups, objects and institutions, ecosystems, or any other entity or phenomenon vulnerable to unwanted change.

What is security and examples? ›

Security means safety, as well as the measures taken to be safe or protected. In order to provide adequate security for the parade, town officials often hire extra guards. A small child will sometimes latch on to a blanket or stuffed animal that gives him or her the feeling of security.

What is IT security in simple words? ›

IT security is the protection of information and especially the processing of information. IT security is intended to prevent the manipulation of data and systems by unauthorized third parties.

Why would I be a good security? ›

Be able to take command and manage people and events if required in an emergency. Work well under pressure (with a clear head and calm approach). Make an effort to communicate clearly and listen intently. Exhibit creative problem solving.

What are the 4 basic of security? ›

The four basic layers of physical security are design, control, detection, and identification. For each of these layers, there are different options that can be utilized for security. Physical security design refers to any structure that can be built or installed to deter, impede, or stop an attack from occurring.

What are the 3 types of security? ›

The three main types of security are physical security, operational security, and information security. Here's a brief overview of each type: Physical security: Physical security refers to measures taken to protect physical assets, such as buildings, equipment, and people.

What does a security question mean? ›

A security question is form of shared secret used as an authenticator. It is commonly used by banks, cable companies and wireless providers as an extra security layer.

How do you create a security answer? ›

Make sure you have secure questions and answers: If your friends, family, or anyone else can guess or research your answers, you need to change the questions. For example, avoid questions about your birthday, elementary school, first car, or mom's maiden name.

What are the 7 types of security? ›

These are economic security, food security, health security environmental security, personal security, community security, and political security. Some of the criteria associated with economic security include insured basic income and employment, and access to such social safety net.

Why is it called a security? ›

The original meaning of "security," which dates back to the mid-15th century, was property pledged to guarantee some debt or promise of the owner. Starting in the 17th century, the word came to be used for a document evidencing a debt, and eventually for any document representing a financial investment.

What is security used for? ›

To Deter Crime and Criminals

This is why you often see security measures like gates, fences, and surveillance cameras around government buildings or businesses. These measures make it clear that the people inside are not to be messed with.

What is personal security? ›

Personal security refers to the state of being safe from danger or harm. It is the protection of oneself and one's property from threats such as theft, violence, or cyber attacks. Examples of personal security measures include: Locking doors and windows to prevent break-ins.

What are the key principles of security? ›

There are four basic security principles: access, authentication, authorization, and accounting. Use physical and software controls to protect your hardware or data from intrusion. For hardware, access limits usually mean physical access limits. For software, access limits usually mean both physical and virtual means.

What is security and why is IT important? ›

Security measures safeguard property and assets, whether they are physical assets such as buildings, equipment, or intellectual property. Through surveillance, access control, and alarm systems, security professionals help deter theft, vandalism, and unauthorized access.

What are the 5 security requirements? ›

Here are the five pillars of the IA framework that you need to manage in your office cyberspace:
  • Confidentiality. This is the assurance that information is not disclosed to unauthorized individuals, groups, processes, or devices. ...
  • Integrity. ...
  • Availability. ...
  • Authenticity. ...
  • Non-Repudiation.

What are the 5 A's of security? ›

This comprehensive guide to cloud identity management reveals the significance of the five A's: Authentication, Authorization, Account Management, Audit Logging, and Accountability.

What are the 3 basic security requirements? ›

Because security is a weak-link phenomenon, a security program must be multidimensional. Regardless of security policy goals, one cannot completely ignore any of the three major requirements—confidentiality, integrity, and availability—which support one another.

What does it mean to need security? ›

Security is a multifaceted concept. It's not just about physical safety or financial stability, but a deeply-rooted sense of well-being that encompasses how we perceive ourselves in the world. It's about feeling safe not only externally but within the very core of our who we are.

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