The Difference Between Stocks and Securities. Is Investing in Securities Just Gambling?

Stocks and securities are two commonly encountered concepts for investors. However, many people are still unsure about the differences between them. Understanding the nature of stocks and securities can help investors make more effective decisions on their financial journey.

1. Are stocks considered securities?

Stocks are a type of security. Securities are a broad term that includes financial instruments such as stocks, bonds, fund certificates and financial derivatives.

Stocks represent partial ownership in the issuing company and the owners of the shares are called shareholders, who have the right to receive dividends and participate in the decisions of the company.

According to Clause 1, Article 121:

A stock is a certificate issued by a joint-stock company, an accounting record or electronic data that confirms ownership of one or more shares of that company.

According to Clause 1 and Clause 2, Article 114 of the Enterprise Law 2020, there are two types of stocks:common stocks and preferred stocks.

• Common stocks: Common shareholders have the right to attend and vote on major company decisions. They essentially have management and control rights in the company.
• Preferred stocks: Preferred shareholders enjoy certain privileges, such as voting rights, dividend priority, or capital repayment, depending on the type of preferred stock held.

2. What are securities?

Securities are tradable financial assets that represent ownership or a creditor relationship with an organization or business. Securities can include stocks, bonds, fund certificates, and derivative instruments.

Securities are commonly traded on exchanges, offering investors opportunities to earn profits through trading or financial benefits like dividends from stocks or interest from bonds.

According to Clause 1, Article 4 of the Securities Law 2019, securities are assets, including:

• Stocks, bonds, fund certificates

• Covered warrants, stock purchase rights, depositary receipts

• Derivatives

• Other securities as regulated by the Government

Stocks are a type of security. Securities are a broad term that includes financial instruments such as stocks, bonds, fund certificates and financial derivatives.

Stocks represent partial ownership in the issuing company and the owners of the shares are called shareholders, who have the right to receive dividends and participate in the decisions of the company.

• Liquidity: Securities are highly liquid, with stocks being among the most liquid types. However, transferability varies between different types.

• Risk: As financial assets, securities are affected by various factors such as market conditions, political situations, and inflation—all of which influence investor psychology.

3. Differences between stocks and securities

4. How to buy stocks and securities for beginners

Step 1: Choose a method to buy stocks

You can buy stocks in three ways: directly from the issuing company, through a traditional broker, or via an online brokerage platform. Beginners are advised to consult a broker for guidance. Experienced investors may purchase directly.

Step 2: Open an account

Many online brokers allow for easy account opening. The sign-up process is usually simple with clear instructions. You may consider opening an account with VNDirect or SSI.

Step 3: Learn about stock types and choose the right one

Stocks come in various types with distinct characteristics. Study them to find the most beneficial one for you. Use analysis tools and updated sources to assess companies. This info is often available on brokerage websites.

Step 4: Decide to buy stocks

For beginners, treat investing as a learning experience. Start with small investments and scale up as you gain confidence.

Step 5: Place a stock order

Understand the types of orders:

• Market Orders: Buy/sell immediately at the best current price. These orders are executed right away without a specific price. Smaller companies tend to have more price volatility.

• Limit Orders: Let you control the trade price. When the ask price drops to your chosen level, the trade is executed. Brokers may profit from the bid-ask spread when your limit is met.

Example: If stock A is trading at 200,000đ and you place a buy order at 180,000đ, the transaction will only be completed if the price drops to your specified level.

5. Is investing in securities the same as gambling?

The main reason many investors struggle in the stock market is lack of knowledge.
Securities investing is complex and requires a deep understanding of finance, business, market analysis, and many other factors.

Today, the belief that “buying equals winning” no longer holds true. Blindly following stock tips or chatroom suggestions without evaluating a company’s fundamentals, industry, or macro factors can lead to losses.
The stock market is not a game of chance—it demands serious commitment, continuous learning, and discipline.

Basic knowledge every investor should have:

• Understanding of financial markets: Know the nature of instruments like stocks, bonds, and derivatives. Recognize the associated risks to develop a suitable approach.

• Micro and macro financial knowledge: Be able to evaluate business performance. While this is a basic skill for trained finance professionals, it can be challenging for others.

In reality, many retail investors still lack full awareness of the market, leading to speculative strategies and undesirable outcomes.

6. Conclusion

Choosing between investing in stocks or other securities depends on each investor’s needs, goals, and understanding of market dynamics. The above content has been shared by Finance Solutes to help guide you.