how to evaluate securities investments

How to evaluate Securities investments

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I want to take a break from my normal real estate discussions in order to talk about how to evaluate Securities investments. I get asked about stocks, bonds, and the Thrift Savings Plan, enough that I thought it was time to create some content!

A “Security” is a tradeable, negotiable financial instrument that holds monetary value. It represents an ownership position in publicly-traded corporations through stocks, bonds, or options (source).

I want to discuss securities first for two reasons. First, your Thrift Savings Plan contributions are Securities investments, and will most likely be the first real investment you make. Secondly, you will hear a LOT of people talk about investing in the stock market, and you need to know the good and bad side of that in order to avoid falling prey to bad investment advice, or strategies.

The two main types of Securities are equities and debts.

Equity securities represent an ownership interest held by shareholders, such as owning stocks. Typically there is no regular payment amount with these, although many companies pay an annual dividend to their investors. You will get to receive any profit from the value of your stocks increasing, minus capital gains tax, when you sell.

Debt Securities represent money that is borrowed and must be repaid, such as bonds or certificates of deposit. You will receive a guaranteed rate of return over the course of time you agree to invest in these assets. This method does not allow you to benefit from profit generated, but you don’t have the risk of losing money when investing in things like government-backed bonds.

There are hybrid versions of these like convertible bonds or equity warrants, but you don’t need to worry about these during this overview.

The Stock Market

You have undoubtedly heard about investing in the stock market. When you purchase a share of stock you are purchasing a small ownership interest in that company. There are a lot of cool ways to invest in the stock market, here are some of the ways you should understand.
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My name is David Pere, I am an active duty Marine, and have realized that service members and the working class use the phrase "I don't get paid enough" entirely too often. The reality is that most often our financial situation is self-inflicted. After having success with real estate investing, I started From Military to Millionaire to teach personal finance and real estate investing to service members and the working class. As a result, I have helped many of my readers increase their savings gap, and increase their chances of achieving financial freedom!
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