What Is a Financial Security? Definition, Types, Examples

What Are Financial Securities?

By Kristi Waterworth – Updated Aug 15, 2025 at 2:48 AM

Key Points

Equity securities offer ownership and control in firms; debt securities are like loans with set repayments.
Hybrid securities combine features of both equity and debt, offering versatile investment choices.
Crypto assets often aren't regulated as securities, leaving gaps in investor protection.

If you’ve ever invested in stocks, bonds, or certificates of deposit (CDs), you’ve owned financial securities. Most -- but not all -- investment instruments count as financial securities. Keep reading to learn how a financial security is defined as well as what types of investments don’t meet the criteria.

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A balance with a money bag on one side and stacked boxes of ETFs, stocks, bonds, and other assets on the other side. — Image source: The Motley Fool

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Bonds

Bonds are debt securities that entitle the holder to receive interest payments.

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Hybrid securities combine features of both equity and debt securities. Convertible bonds and preferred stock are examples of hybrid securities. Some people also include derivative securities and asset-backed securities as their own categories.

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SEC (Securities and Exchange Commission)

The SEC, or Securities and Exchange Commission, is an independent government agency responsible for ensuring the integrity of the capital markets in the United States.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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