This is the investment that most people are familiar with – a stock. When you buy a stock, you own a “share” – a small piece of a company. Stocks can be bought or sold on a stock market and the price can go up and down throughout the day (when the market is open).
It used to be common for you to get a paper stock certificate when you bought stock, but now, your ownership of stock will almost always be in “street name.” This means the shares are owned by you, but registered in the name of your brokerage (ShareBuilder is a brokerage). Shares of stock are normally held electronically.
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This type of investment allows you to own a “share” in a company (like a common stock). The difference between preferred stock and common stock is that if you own preferred stock, you are generally paid dividends before anyone who owns common stock. Also, if you own preferred stock, you generally do not have voting rights, while those who own common stock generally do have voting rights. In addition to dividends, some preferred stocks (not all) even pay shareholders a portion of the company’s profits. If a company goes bankrupt, preferred shareholders are paid before owners of common stock.
This type of investment is similar to a mutual fund in many ways, but it trades like a stock on a stock market. It’s like a mutual fund because it allows you to own a collection of underlying stocks or investments. The investments could be focused on tracking familiar indexes (like the Dow Jones Industrial Average or the S&P 500). Other exchange-traded funds (ETFs) could focus on a specific industry or a style of stock. However, unlike mutual funds, ETFs are not actively-managed.
ETFs trade like stocks because they can be bought and sold on a stock market and their prices can go up and down throughout the day when the market is open.
This type of investment allows you to indirectly own stock in a foreign company that is traded on a stock exchange outside the United States. American depositary receipts (ADRs) are bought and sold on a U.S. stock exchange in U.S. dollars. An ADR certificate represents shares of the company bought by an issuing U.S. bank on a foreign stock exchange. ADRs are not available for all foreign companies.
A mutual fund is usually a combination of stocks, bonds and/or cash that is professionally overseen by a fund manager. For example, instead of researching and choosing individual stocks yourself, you can invest in a mutual fund for a “many-stocks-in-one” investment. If you own a mutual fund, you may have to pay some charges and expenses to the fund manager.
If you own an option contract, it gives you the right to buy (call) or sell (put) shares of stock at a specific price. The contract is generally good for a specific amount of time. Option contracts can be bought or sold and are primarily for experienced investors, due to their complexity and risk.
Please note: Options involve risk and are not suitable for all investors. Before investing in options, please read the Characteristics and Risks of Standardized Options.
This type of fund is a publicly-traded investment company that raises money using an initial public offering (IPO). After the IPO, the closed-end fund is made available and traded like a stock on a stock exchange. While it can be bought and sold like a stock, a closed-end fund is different because the fund is invested in a group of stocks to follow a specific industry or region of the world and is professionally managed.
A unit is like a combo deal – it allows you to buy multiple securities, like a stock and a related warrant, in one package instead of two. Units can be bought and sold on a stock exchange, just like common stocks.
If you have a warrant, it gives you the right to buy more shares of a security at a specific price (the exercise price). A warrant usually doesn’t expire for a long time (months, years, or sometimes never). Warrants are generally issued along with a security (like preferred stock or a bond) and the number of warrants you receive depends on the number of shares you own in the security. If the market price for the security goes above the warrant’s exercise price, you could then buy the security at the exercise price and sell it at a profit. Like stocks, you can also buy and sell warrants on the stock exchanges.
If you own a stock for a company that issues a ‘right’ to you, you have the opportunity to buy more shares of the stock at a specific price (usually at a discount) before the stocks are made available to the public. Rights usually expire within a short amount of time (like 2 weeks or a month). The number of rights you receive depends on the number of shares you own in the stock.
An index is like a barometer. Just like a barometer measures changes in air pressure, an index shows you how the value of a group of securities is doing – if it’s going up or down. The group of securities is chosen to represent the general economy, specific types of companies, or a specific industry. Some market indexes you may have heard of are the Dow Jones Industrial Average, the S&P 500, and the Russell 2000. When you view a quote for an index, you’re really seeing the value of many different securities at once.
The company that provided the quote information for this symbol did not include what type of security it is (for example, a common stock, preferred stock, or a warrant). You may want to investigate more thoroughly before investing.
This type of investment trades like a stock on a stock market. A real estate investment trust (REIT) allows you to invest in real estate properties and/or mortgages and possibly earn dividends.
Some real estate investment trusts only invest in property and some only invest in mortgages. Others invest in both property and mortgages.
Some real estate investment trusts focus on certain types of properties, like shopping malls or warehouses. Others focus on the real estate market in a certain region or country.
Securities products are offered by ShareBuilder Securities Corporation, a registered broker-dealer and Member FINRA/SIPC. ShareBuilder Securities Corporation is a subsidiary of ING Bank, fsb. Brokerage Financial Statement