In the current era, in order to have an additional source of income, many people have chosen to invest in the stock market. Many people think that investing in stocks will bring a quick source of passive income without having to do anything. In fact, this is a wrong view, because many investors are subjective and have to receive "bitter fruit" from this investment channel. Therefore, in order to invest in securities effectively and bring profits, investors must have basic knowledge about securities, as well as spend a lot of time to explore and learn. Let's follow PHS to learn more about this issue.

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» What are securities?

Securities is a form of evidence confirming the legal ownership of that owner with the assets or capital of the issuing company or organization. Specifically, a share represents the legal ownership of a business. Corporations will issue shares (common stock and preferred stock). Shares when exchanged for each other will be called "securities". Thus, investing in the stock market means that you are buying ownership of one or more businesses.

Securities include: stocks, bonds, investment fund certificates, derivative securities, warrants, depository certificates,... All securities are deposited at the Securities Depository Center. Vietnam (VSD) is managed by the state.

Currently, securities are divided into 3 main categories:

Equity Securities

Equity securities are commonly known as common stocks. This is a type of security issued by a joint-stock company and represents the ownership of a part of the company's capital and assets to shareholders.

Owners of equity securities are paid dividends if the company does well and  benefits from arbitrage (buy low sell high).

Debt Securities

Debt securities are securities used to confirm a lender-borrower relationship. When you own debt securities or corporate bonds, you are a creditor and the company is obligated to repay. Debt securities represent loan amount, interest rate, term, maturity,...

Derivative securities

A derivative is a financial contract established to confirm the rights and obligations between two parties at the present time, regarding a transaction to be performed at a specified time in the future. Currently, on the Vietnamese stock market, there are derivatives trading, and its price depends on the VN30 index.

»  Characteristics of securities
Creditial

  • Creditial

Securities have the ability to convert into cash more quickly than other assets, which is reflected in their ability to trade on the secondary market. Different types of securities have different transferability, but listed stocks have better liquidity than other securities.

  • Calculate risk

Normally, any financial product has its risks and the level of risk is different, so is the case with securities. In addition, there are market risks, inflation and political risks that have a direct impact on this financial asset class.

  • Profitability:

A security is a financial asset that an investor who owns is expected to receive a larger income in the future. This income is mainly obtained from dividends distributed or an increase in the price of securities in the market.

» Things to know before participating in the stock market

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  • Learn the basics

For F0 investors, learning and understanding the basics of stock investment is very important. Because only when we have a preliminary knowledge of securities, we have the opportunity to invest successfully. In fact, there are many experienced investors but the investment efficiency is not high. That is because they have not mastered the basic knowledge base, only rushing into transactions without finding an effective investment method for themselves. Therefore, learning stock knowledge is a must before starting to participate in the stock market.

  • Find relevant information

Investors should look for relevant information during the investment process to help and support themselves. Finding information about the company that owns the stock/bond, how the market works, or the effects on the stock/bond price, etc. will help you invest effectively and minimize your risk. riskier. However, nowadays, there are many sources of both right and wrong information that make us easily confused, so investors should carefully filter and select useful information to see.

  • Open an account

The first step when participating in the stock market is that you must have a stock account for yourself, this is a prerequisite before starting a trade. When choosing to open an account, you should research and consider carefully because there are now many reputable companies that cause heavy property damage. Therefore, investors should make a list of reputable and highly regarded companies to open an account here. Investors can refer to opening an account at PHS. PHS is confident to be one of the professional, strong financial securities investment companies with more than 16 years of experience in this field.

Through the sharing in the above article, PHS hopes to be able to partly answer questions about securities knowledge for investors. If you want to participate in stock investment, please create an account right at PHS.