hi today we are talking about different
types of
assets but before we talk about
different types of asset
we need to define what exactly is asset
so
asset is anything which puts money in
your pocket
like rental income stocks or any
business assets
there are five types of assets
securities, currencies,
contracts, commodities and real assets
in this video we will briefly look about
securities
but before we move ahead smash the like
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thanks there are three types of
securities
fixed income, equity and pooled
investments
first one is fixed income as the name
suggests
it gives you a constant return after
each time period
there can be three types long term short
term
and midterm fixed income securities
these are typically debt instrument
which means the
investment which you will buy is backed
by some kind of
debt or a loan next type of security is
equity which gives you a partial
ownership in
any business there are three types
common stocks
preferred stocks and warrants the third
type of security is
pooled investment as the name suggests
many investors can invest
at once in these kind of securities and
the securities itself
contains a lot of different types of say
stocks or bonds a lot of stocks are
combined together
clubbed together to form these kind of
investments
the examples being mutual funds exchange
traded funds
asset-backed securities and hedge funds
now we will look at equity and pooled
investments
at slightly greater detail starting with
equity first type of equity is common
stock
this is most common among individual
investors like
us generally whenever we talk about
trading stocks
we mean common stock buying this stock
will give you part ownership in the
company as it's an equity
which means you will share the profit as
well as the losses of that particular
business
you will also get voting rights through
which you can express
your views to the management decisions
but
be careful if the company goes broke
and had to shut off common stock holders
will be the last one to be paid then
who will be paid before common
stockholders the answer is
preferred stockholders this is less
common among
individual investors although they also
own a
portion of the company or business but
they don't get a voting right and
it's more like fixed income security
finally warrants they allow you to buy
equity of a
business or company at a later point in
time
for those who know about derivatives
it's more like options
but those unfamiliar with the term this
is just an
introductory video so don't worry we
will cover
everything in the subsequent videos
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to warrants
again they allow you to buy stocks of a
business
at a later point in time you get the
rights today
but they are not traded on stock
exchanges and generally have a longer
life span
of around 10 to 15 years this was equity
now moving on to pooled investments
first
is mutual funds which is very common
imagine it as a jar of candies
that you can buy at a candy store
experts filled
each of these candy jars with different
kind of candies
you might like some or might not like
the others
here each candy represent a stock, bond
or any other type of asset. The candy jar
is prepared
by expert candy makers who are called
fund managers and the market defines the
price of
each and every candy once in a day that
is
mutual funds are traded once in a
working day
the second type of pooled investment is
exchange traded funds or etfs this is
again a type of candy jar
similar to mutual funds but generally
tracks a market index like
nifty50, sensex, S&P 500,
etc, etc, etc and are traded
like common stocks throughout the
trading hours
third type of pooled investment is
asset-backed
securities or ABS. People take some loan
against collateral assets
like home loan against your house car
loan
against your car education loan or
credit card debt
if one fails to repay the loan back to
the bank
then the bank will seize the car or the
asset
asset backed securities are a bundle of
such asset banked
loans which investors can buy the assets
do not include
mortgage or real estate finally
the hedge fund simply defined it is
managed by
highly specialized fund managers they
take money from large investors
or sophisticated investors and deploy
different
complex strategies to maximize gains or
profits
and take a small percentage of profit
as well as a management fee hope you got
the flavor
each topic in itself is quite vast and
we will cover everything in
coming videos. Let's summarize what we
have discussed till now
there are five types of assets -
securities, contracts, real assets currencies and
commodities
in securities there are three types of
securities
fixed income, equity and pooled
investment
first fixed income security which
provides fixed return over time period
the examples being treasury bonds notes
or bills
second one is equity which gives you a
part ownership in some company
this is further subdivided into common
stock preferred stock
and warrants finally the pooled
investment
which invests in a bundle of assets like
mutual funds exchange traded funds
asset-backed securities and hedge funds
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