Welcome to Securities 101—where we break down investing basics to help you feel more confident taking your first steps. Whether you’re planning for retirement, education, or looking to build long-term wealth, this guide is for you.

1. Why Consider Investing?

Investing isn’t just for Wall Street—it’s for anyone with a dream and a goal:

• Trying to grow your money
  Investments like stocks, bonds, and mutual funds can potentially earn more than traditional savings accounts.
  (Just remember that higher returns come with some risk.)
• Plan for retirement
  Through tools like 401(k)s or IRAs, you can invest for your future and let your savings work for you.
• Pursue life goals
  Whether it’s buying a home, starting a business, or saving for college, investing may help you earn more over time.
• Maximize tax benefits
  Contributions to retirement accounts often reduce your taxable income today.
• Benefit from employer matches
  If your employer offers matching contributions in a 401(k), that’s free money you don’t want to leave behind!
• Support innovation
  Putting money into new ventures can help grow the economy and create jobs—plus, it’s exciting to be a part of something new.
• Potentially build passive income & fight inflation
  If you’re able to achieve positive returns through your investment choices, your money can work harder, and your purchasing power can be protected.

2. What is Securities Trading?

Securities trading means buying and selling financial assets—think stocks and bonds—to try to make a profit. Traders look to buy low and then sell high, but market unpredictability makes this short-term approach a risky proposition.

3. Understanding “Securities” and Their Types

A “security” is a tradable financial asset. Here are the main types you’ll likely hear about:

Security Type	Definition
Stocks (Equities)	Ownership in a company—offers dividends & growth potential.
Bonds	Loans to governments or corporations—pays interest and returns the principal.
Mutual Funds	Professionally-managed pools of stocks or bonds—great for diversification.
ETFs	Similar to mutual funds, traded like stocks—often track an index or theme.
Real Estate / REITs	Invest in property directly or via real estate trusts.
Commodities	Assets like gold, oil, or crops—often used to hedge risk.
Cash Equivalents	Savings accounts, CDs, or money-market funds—safe, low-risk and liquid.

4. Saving vs. Investing: What’s the Difference?

• Saving is about preserving and accessing your money quickly – with low risk and minimal returns.
• Investing involves higher risk for the chance of greater, long-term growth – but your money isn’t guaranteed and could lose value.

5. What is Risk Tolerance?

Risk tolerance is how much loss you’re willing to weather in pursuit of potential gains.
It’s personal – depending on your age, goals, income, and feelings about market volatility.

6. The Risks of Investing

All investing comes with risk, including:

• Market ups and downs (fluctuation)
• Sudden volatility (unpredictable changes in value)
• Economic or political turmoil (regulatory changes can impact investments)
• Regulatory shifts (changes in laws and regulations)
• Rising interest rates
• Difficulty converting assets to cash
• Credit or company defaults (counterparty risks)
• Operational or management issues

In short: Your investments could lose value – sometimes unexpectedly. That’s why diversification matters.

7. What is a Stock Index?

A stock index, like the S&P 500 or Dow Jones, tracks a range of stocks to measure overall market performance. Think of it as a snapshot of how the market or a sector is doing.

8. How Stock Buying & Selling Works

• Buying: You purchase shares from someone else – those payments go to the seller, not the company.
• Selling: You sell your shares on the exchange – again, to another investor, not the company.
• Price: Determined by supply and demand, plus performance, news, and sentiment.

9. Stock Price Basics

Stock prices change as investors weigh future prospects. Key influences include:

• Company earnings
• Industry trends
• Economic health
• Market sentiment
• News and events

10. What is an ETF?

ETFs are funds you can buy and sell like stocks. They can hold a varied portfolio of assets, including stocks, commodities, bonds, and currencies – providing you with access to diversification.

11. What are Dividends?

Dividends are payments companies make to shareholders from profits. Here’s what to know:

• Usually paid quarterly in cash
• Not guaranteed – it’s up to the company’s board
• Paid per share – own more shares, get more money
• Preferred stocks often get dividends first

12. What is Diversification?

Spreading your investments across asset types potentially helps balance your risk and might smooth out ups and downs.

13. Building a Diversified Portfolio

Some approaches you may want to consider:

1. Mix asset classes (stocks, bonds, real estate, cash)
2. Diversify within each class (different sectors, credit ratings, durations)
3. Pick asset allocation based on goals and risk comfort
4. Rebalance regularly to stay on track
5. Include non-correlated assets like gold or real estate
6. Choose high-quality investments with solid fundamentals
7. Monitor and adjust over time as your life changes

By following these steps, you can shape a portfolio that’s robust, balanced, and in line with your goals.

Final Thoughts

Investing isn’t about gambling – it’s about you building a plan. Starting with a clear strategy and understanding how securities work can help you build knowledge and set up a path for pursuing your goals.

Want to Dive Deeper?

Visit the Create Credit Union website for additional securities and investment resources or to open your trading account. Create Credit Union is here to help you create a plan that fits your life – and your dreams.

Disclaimer: Investing involves risk, including the potential loss of principal. This blog is for information only and not investment advice.