The investment world is divided into owners (those who invest in equities, or stocks) and loaners (those who invest in debt, or bonds). Owning equity in a company is perhaps the most common and widely accessible means by which investors meet their financial objectives. Individual investors become owners of a publicly-traded company by purchasing stock in that company; by doing this, they can participate in the company's growth over time.

Investors may also choose to loan money to companies, governments or municipalities in return for regular interest payments and the eventual return of their principal at a given date in the future. They can purchase Treasuries from the U.S. government for safekeeping, municipal bonds from state or local municipalities across the country (or even as far away as Guam) to save taxes, or corporate bonds from a multitude of companies to provide a regular stream of income payments for retirement. Investment companies also buy these securities, albeit in greater quantities than the individual investor, to make up their mutual funds, which may appear in a variable annuity.

You may not know it, but when you keep your money in a money market account, you are actually lending your money in return for interest. The interest is small compared to other types of loans and you get your principal back very quickly, but you are still lending money.

The three basic types of investment securities are money market, debt (bonds) and equities (stock). Each of these is detailed in the sections below. Another way to classify securities is by the type of issuer. Corporations can issue both stocks and bonds. Governments (such as federal, state or municipalities) can issue either money markets or debt securities.



Corporate Bonds

Related Articles
  1. Investing

    Why Muni Bonds and Bond Funds are Perfect Together

    Municipal bonds and bond funds differ in several ways, which is partly why they complement each other well.
  2. Investing

    Think Twice Before Buying Tax-Free Municipal Bonds

    Municipal bonds are relatively safe, tax-exempt securities--but they are not without drawbacks. Due diligence is required.
  3. Investing

    A Look at the Pros and Cons of Muni Bonds

    Considering muni bonds? Here's a look at their pros and cons.
  4. Investing

    The Basics Of Municipal Bonds

    Investing in these bonds may offer a tax-free income stream but they are not without risks.
  5. Financial Advisor

    Advising FAs: Explaining Bonds to a Client

    Most of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
  6. Investing

    The Top 5 Municipal Bond Funds for 2016

    Understand how the addition of municipal bond mutual funds can enhance a portfolio, and learn the top-rated municipal bond funds to consider for 2016.
  7. Financial Advisor

    Muni Bonds, Taxable Bonds or CDs: Which is Best?

    Here's how to tell if municipal bonds are a better investment than taxable bonds or CDs.
  8. Investing

    5 Reasons to Invest in Municipal Bonds When the Fed Hikes Rates

    Discover five reasons why investing in municipal bonds after the Fed hikes interest rates, and not before, can be a great way to boost investment income.
  9. Financial Advisor

    How to Find the Best Bets in Muni Bonds

    Approach investing in municipal bonds the same as you would investing in stocks.
  10. Investing

    4 Tax-Free Muni Bond ETFs to Consider

    Tax free municipal bond ETFs are an excellent way to build wealth slowly. Here are 4 you should consider.
Frequently Asked Questions
  1. What is the difference between yield and return?

    While both terms are often used to describe the performance of an investment, yield and return are not one and the same ...
  2. What are the Differences Among a Real Estate Agent, a broker and a Realtor?

    Learn how agents, realtors, and brokers are often considered the same, but in reality, these real estate positions have different ...
  3. What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally ...
  4. Which is better, a fixed or variable rate loan?

    A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ...
Trading Center