Anyone who invests their money in securities can easily achieve substantial returns. But what exactly are securities? How do they work And where can I buy it? You can read all the information here.
If you want to let your money work for you, you have two options: You can either leave it in your daily, fixed-term or current account and earn very little interest income – or you can invest it in so-called securities. Examples of this are stocks or bonds.
But how exactly do securities work? What types are there? And why should I invest my money in it? t-online clarifies the most important questions about securities.
What are securities exactly?
In theory, securities represent a specific right – which exactly depends on their design. In practice, this refers to asset classes that are also relevant for small investors, for example a share that certifies the owner’s right to a share in a company.
Securities are usually traded on the stock exchange, where you can also buy them (see below). But there are also other forms of securities. For a long time, a banknote was also a security, as our money was backed by gold until a few decades ago.
Good to know
The term “security” comes from the fact that physical paper was still used to certify rights. This is now only done digitally.
What types of securities are there?
There are many different types of securities. t-online shows you the most common:
How and where can I buy securities?
You can buy securities through what is known as a securities account. Here you can choose which type and which security you would like to buy.
You can decide where to buy the securities when placing your order in the securities account. You can either opt for a classic stock exchange such as the Frankfurt Stock Exchange, where they are traded. You can also purchase securities through a direct dealer who keeps them in stock.
Why should I invest in stocks?
Because the returns, called returns, that the securities generate for you as an investor are significantly higher than if you had your money around on the overnight account or that Savings book let lie.
At the same time, however, the following applies: the higher the return, the greater the risk. Because the performance of securities depends on supply and demand. If many investors want to buy a security, for example a share, its price rises. But if many investors want to sell it, the price will fall. So if the price falls you could lose your money.
You can avoid this risk by investing in many securities. This is easiest with a so-called index fund or ETF. This replicates an index – so you invest your money in all stocks or bonds in this index. This is how you spread your risk widely.