Securities can be a high-yield investment. But some investors have too much respect for them to consider them for themselves. That's a shame, because they are missing out on a good opportunity. Read here what you need to consider if you want to buy securities, trade with them or use them for retirement provision.
Before trading in securities, you should first find out what securities are all about. Therefore, we explain the legal basics and show you the different types of securities: This way, in the next step you can recognise the opportunities and risks for yourself as an investor that this form of investment entails.
Legal basics
For many investors, securities are the same as shares. But bonds, savings books and debentures, for example, also belong to the category of securities. A security is a document that certifies certain rights. These can be rights of claim, such as the right to payment of a building society sum, or also membership rights. You can distinguish between the different types depending on the beneficiary or entitled person:
- Bearer securities: they entitle the presenter to assert a right. By presenting your savings book, for example, you are entitled to withdraw the money. In addition to bearer shares, bearer cheques or bearer bonds also belong to these papers.
- Order papers: The person named on the paper by the original beneficiary is entitled. Order papers include registered shares, bills of exchange and order cheques.
- Recta securities: Securities that are transferred by agreement, assignment or surrender. Recta papers, such as savings books or mortgage deeds, entitle the person named on them.
All types of securities have in common that they are negotiable and tradable according to the law. As the holder, you are therefore allowed to sell securities or trade them in Exness and pass them on to other persons. Depending on the type of security, however, special requirements are necessary. For example, in the case of registered shares, i.e. shares issued specifically to you, you must enter the new owner separately on the back.
Furthermore, all securities must grant the beneficiary a certain right. In addition to a claim for payment against a bank, this can also be a shareholder's claim for payment of profit sharing. Although the issue of actual securities is rather unusual, securities basically consist of two parts: A shell, the actual security, and a sheet, which contains several coupons. You can exercise your rights against surrender of a coupon.
Check your securities account before you go on holiday
Before you go on a long trip, it is advisable to check your securities account. Go through your stock portfolio and take a look at possible shaky candidates. Which securities have recently suffered increased losses? Where are there strong price fluctuations that you should not lose sight of?
However, many corporate scandals or acute crises cannot be foreseen and literally come out of the blue while you are on holiday. You can set a stop-loss limit for individual securities or your entire stock portfolio before you start your trip. If the share price falls below a previously set value, your bank automatically receives the order to sell the security. In this way, you can limit losses without having to intervene yourself if the worst comes to the worst.
