Introduction to Securities for Kids and Teens
This video explains the concept of securities in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about securities, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Elementary School
- Middle School
- High School
The topics covered are:
- What are securities
- What are the different types of securities
- How are securities traded
- What securities should you invest in
What are securities?
Securities is a general term used to refer to different types of financial instruments that have monetary value and can be bought and sold.
Securities can be issued by a company or a government, and have different levels of risk and liquidity.
When it comes to investing, securities are one of the most common avenues to make your money grow. Some examples of securities are stocks, bonds, mutual funds, derivatives, certificate of deposit, Treasury bills, etc.
The original seller of a security is called the issuer, while the buyer is called an investor. Securities are a means for the issuers to raise capital.
What are the different types of securities?
There are three main types of securities: Equity, Debt, and Hybrid.
Equity securities represent ownership stake of the holders – for example, stocks. They are assets and can be sold for a profit, also called capital gain.
Some companies also make periodic payments of a portion of their profits – called dividends – to their shareholders, although it is neither fixed nor guaranteed. They are generally considered higher risk securities with a potential for higher returns.
They are generally lower risk securities with predictable but lower returns than stocks.
Hybrid securities combine aspects of equity and debt. They are somewhere between equity and debt securities, in terms of both risk and returns.
An example would be convertible bonds, that are issued as bonds with an option to convert to equity at a later date.
How are securities traded?
Different securities are traded in different ways.
Publicly traded stocks start with an Initial Public Offering (IPO) when they are first offered to the general public. After the IPO, stocks get listed on a stock exchange and are traded in the stock market.
Unlike stocks, bonds are usually traded over-the-counter in the secondary market after being initially issued.
What securities should I invest in?
Depending on your personal situation and risk appetite, the type of security you invest in would differ.
For instance, if you’re young and can handle risk, you can consider investing in the stock market. Having a longer investment horizon would take care of any short term fluctuations in the stock market and would yield good returns over the long term.
If you are looking at a shorter investment horizon or like predictable returns, you can invest in bonds.
Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens
Podcast: What are Securities?
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about securities: What are securities, what are the different types of securities, how are securities traded, what securities should you invest in, and more. Show notes and transcript at: What are Securities? A Simple Explanation for Kids, Teens and Beginners Everything you need to know about securities: What are securities, …