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Securities are: Definition, Types, and Tips for Choosing Them

Securities are: Definition, Types, and Tips for Choosing Them - For those who want to start investing, securities are an important element so that your investment activities are maintained. In fact, the meaning of securities refers to an entity related to your investment assets and shares. Then, what is securities in depth? Let's find out more in this article.

What is Securities

In studying investment, you may have asked what is a security? According to the Big Indonesian Dictionary (KBBI), securities are evidence of a statement of capital or proof of debt. Usually the evidence is better known as investment instruments such as stocks, bonds, deposits, and so on.

The Financial Services Authority (OJK) itself has an identical definition regarding the meaning of securities. According to OJK, securities are evidence of debts that have the nature to be traded. In other words, the investment assets that you currently have are securities.

As an investment, a security is a financial element that is obliged to generate profits for its owner. The profit comes based on a percentage of the value of the assets that the investor owns. In addition, you as an investor can carry out buying and selling activities of the securities you have.

Buying and Selling Securities

Even though assets and securities are part of the investment, you can't just make buying and selling transactions. In this case, you can only buy or sell securities on the stock exchange.

In Indonesia, the Indonesia Stock Exchange is an institution that acts as a securities market. Not only related to buying and selling, the stock exchange also manages the movement of securities every day.

Beyond that, you also need to know the meaning of securities related to securities companies. You can think of the Indonesian Stock Exchange as the center. However, real transactions can only be done at companies or securities providing institutions.

Banks are one of the official institutions that are licensed as securities companies. The permit is issued by OJK. Outside of banks, there are still other private companies, both foreign and local, that act as securities providers. For that, make sure you start investing in places that are official and registered by the OJK.

Security Type

In current practice, there are two types of securities that investors can own as investment assets. Both are known as debt assets and also equity. Both offer their own advantages and disadvantages as investment assets. The following is an explanation of the two different types:

1. Debt Securities

As the name implies, the meaning of debt securities is a type of asset based on debt. Investments made by investors are by buying the rights in part or in full from the statement of debt. Generally the letter is a certificate or securities both individuals and in an organization.

In this case, investment instruments that are known as debt securities include bonds, deposits, and valuable assets as collateral from the company. For your own benefit, generally you as an investor will get interest with a predetermined value as an agreement.

2. Equity Securities

The second common type of security comes from equities. This type is more commonly known by the term stock. As a reminder, equity or shares are proof of ownership of the company. The ownership represented by these shares is not in full ownership.

Shares are the percentage of ownership of a company or business entity that is deliberately sold. Although stocks tend to be popular instruments as equities, there are other types that you can know about. These include dividends, real estate investments, and mutual funds.