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Equities, commonly called stocks, represent ownership in a company. Purchasing equities is buying a share of the business. You gain a claim on part of the assets and earnings. Common stock is the most popular form of equity. The equity provides voting rights and potential dividends. Types of Equities The main types of equities include: Common stock: Provides voting rights and a share in the company's profits through dividends. Preferred stock: Does not typically offer vo

Cash equivalents are securities with solid credit quality and high liquidity. These securities are considered equivalent because they can be quickly converted into actual cash. Types of Cash Equivalents Cash equivalent securities have a low-risk, low-return profile, short maturities, and high liquidity. Examples include the following: Treasury Bills Treasury bills are securities issued by the U.S. Department of the Treasury that mature in one year or less: Treasury bill p

An exchange-traded fund (ETF) contains investments organized around a strategy, exposure, or theme. The approach might do one of the following: Track a sector of the stock market, such as energy or technology. Invest in a certain type of bond, such as municipal or high-yield. Track a market index, such as the NASDAQ composite index or S&P 500. An ETF trades on exchanges. The price fluctuates throughout the day, and the fund is liquid and flexible. How Does an Exchange-Tra

A mutual fund is an investment vehicle that pools money from investors with similar investment goals to invest in different asset types. Professional money managers use the money to purchase securities to help achieve the fund’s objectives. The type of mutual funds an individual might purchase depends on their financial goals, risk tolerance, and time horizon. Investing in these funds can support long-term portfolio diversification and lower risk. Types of Mutual Funds Mu