What Are investment securities?
Basically they are a document that records your interest in an organization that you have bought with your cash. So for example when you buy stocks in Google, the share certificate you get in return tells you how many shares you have, what price you bought them at and all the other information relevant to your equity interest in the Google Corporation. Stocks are equity securities. The dollar bills in your pocket are debt securities because they are issued by the federal government and are in effect an ‘I owe you’ on the government.
Investment securities are any note, stock, treasury stock, security future, bond, debenture, ‘I Owe You’ or evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement. They can be bought and included in your investment portfolio in the securities markets direct and or through brokers of various persuasions.
Following the Stock Market crash of 1929 and ‘Great Depression’, the U.S. Congress passed laws to regulate the securities markets and implemented new guidelines. The Securities Act of 1933 is the bedrock of all financial regulation of investment securities to this day. This act requires any companies offering investment securities to the general public, to disclose all relevant information about both the company itself and the security investments on offer.
The Securities Act of 1933 defined the investors who were permitted to invest in certain categories of investments and referred to them as “accredited investors”. The Securities Act also defined ‘accredited investors’ as high net worth individuals. You may be an accredited investor. Wealth is counted as the money value of your home and the value of your IRA or 401k account. This is very important because if you are an accredited investor, you can take advantage of investment securities that most people will never get near. Accredited investors only get offered the prime investment securities, for example privately offered real estate deals to build shopping malls or hotels.
The Securities and Exchange Commission under the Securities act regulates investment securities on general offer to the public.
Of course there is risk involved in all investment securities but the key thing is to find out if you can get access to these investments. Best advice is to consult a financial adviser that you trust and ask them to inform you of any future security investments and especially real estate based ones that are marketed at accredited investors.