I have equities in my 401k, what does that mean
2007-05-22 13:36:04 · 8 answers · asked by Nancy C 1 in Business & Finance ➔ Investing
It means that your are investing in company stocks -- versus investing in debt (bonds).
2007-05-22 13:42:09 · answer #1 · answered by seaportma 5 · 0⤊ 0⤋
Investing in "equities" when talking about the stock market refers principally to investments that give you an ownership interest in a business. Common and preferred stocks, limited partnership interests, interests in a limited liability company, interests in a royalty trust -- all would be considered equity investments.
Investments that are not equity in nature are investments in things like bonds, which represent someone's debt to the holder of the bond and for which the holder receives interest and, eventually, repayment of principal.
Equity is a nice term. The value of your home in excess of the mortgage is also called "equity". Someone else noted that assets minus liabilities equals equity and that is right in terms of your personal situation. But in the context of investments, "equities" represent ownership of a legal entity.
2007-05-22 20:58:28 · answer #2 · answered by BAL 5 · 0⤊ 0⤋
Equity means "ownership". In this case, it means you have stocks. Equity is compared to debt instruments, which would mean you have bonds, notes a company has to repay at a future time at a set value.
The advantage of debt instruments is that you know you will get a specific rate of return if you hold to maturity if the company doen't go belly up. The advantage of equity is that there's no practical limit to what they can be worth, although there's no specific garuntee. The downside is if the company does go belly up, equity gets paid last, after debt.
2007-05-22 20:45:34 · answer #3 · answered by open4one 7 · 0⤊ 0⤋
Equities is just another word for stock or shares. If you own equities, you own a little tiny piece of that company, the value of which is shown in the share price. You get access to any dividends paid (if any) and you get to enjoy the benefits and pains of rises and drops in the share price.
2007-05-22 20:44:48 · answer #4 · answered by Brizza 1 · 0⤊ 0⤋
Equity = asset - liability. Banks care about the money borrowers' equity more than asset. Make sure the amount of your equities in any account is positive.
2007-05-22 20:47:05 · answer #5 · answered by L. 2 · 0⤊ 0⤋
If you are investing in equities, then you are investing in stocks--ownership of a company
2007-05-22 21:25:53 · answer #6 · answered by Tuan 1 · 0⤊ 0⤋
equity means ownership. Primarily stock in this case. You can also invest in debt (bonds), derivatives ( forwards, options) or foreign currency.
2007-05-22 20:46:18 · answer #7 · answered by cjwga84 1 · 0⤊ 0⤋
You are investing in stocks.
2007-05-22 20:47:04 · answer #8 · answered by K M 4 · 0⤊ 0⤋