What Assets Can Be Purchased on the U.S. Stock Exchange?

What Assets Can Be Purchased on the U.S. Stock Exchange?

The U.S. stock exchange is one of the most well-known and accessible financial markets in the world, offering investors a wide range of investment opportunities. Investing in the American stock market can be a great way to grow capital and achieve financial goals. However, before diving into the world of stocks and investments, it is crucial to understand which assets are available on the U.S. stock market. This comprehensive guide will familiarize you with all the options available to investors.

Common Stocks

Stocks are probably the most well-known type of assets on the stock market. When you buy common stocks, you purchase a share of ownership in a company whose stocks are listed on the exchange. These stocks give you the opportunity to receive dividends and benefit from the company's capital growth over time. For example, by opening an investment account with Fondexx, you, like all market participants, will receive dividends paid to stockholders, in addition to owning stocks.

Companies that pay dividends may change over time due to various factors, including economic conditions, corporate performance, and dividend policies. For example, here is a list of well-known companies that have historically been recognized for their high dividend payouts:

• Johnson & Johnson (JNJ): A global healthcare company with a long history of stable dividend payments.
• Coca-Cola Company (KO): A leading beverage company, known for its iconic brands and reliable dividend payouts.
• AT&T (T): A telecommunications giant with a history of significant dividend payments.
• Pfizer Inc. (PFE): A pharmaceutical company with a history of paying dividends.
• 3M Company (MMM): A diversified technological and industrial conglomerate, recognized for its dividend growth.
• Abbott Laboratories (ABT): A global healthcare company with a long history of dividend growth.
• McDonald's Corporation (MCD): A well-known fast-food restaurant chain that has historically paid dividends to its shareholders.
• Other examples include: The Home Depot, Inc. (HD), Colgate-Palmolive Company (CL), Kimberly-Clark Corporation (KMB), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX).

Preferred Stocks

Preferred stocks are similar to common stocks, but they come with certain advantages. They often offer fixed dividends and may have greater rights to company assets and earnings, making them a popular choice for income-oriented investors.

Here are a few examples of preferred stocks issued by well-known companies:

• Wells Fargo & Co. Series L Preferred Stocks (WFC-L): Preferred stocks issued by Wells Fargo, one of the largest financial institutions in the U.S. This is one of many series of preferred stocks offered by the company.
• JPMorgan Chase & Co. Series AA Preferred Stocks (JPM-AA): JPMorgan Chase, another major financial institution, offers various series of preferred stocks, including Series AA, which may have different terms and conditions.
• Bank of America Corporation Series L Preferred Stocks (BAC-L): Bank of America is a leading financial institution offering preferred stocks like Series L with varying characteristics.
• Ford Motor Company 6.20% Series B Preferred Stocks (F-B): Ford, a major car manufacturer, issued preferred stocks, including Series B, which offers a fixed dividend rate.
• Procter & Gamble Company 5.00% Series O Preferred Stocks (PG-O): Procter & Gamble, a consumer goods manufacturer, has various series of preferred stocks, including Series O.

Bonds

Bonds are debt securities issued by governments, municipalities, or corporations. They offer regular interest payments and a return of the bond's face value upon maturity.

Bonds are another class of assets that investors can purchase on the U.S. stock exchange. Essentially, bonds are loans (debt securities) provided to corporations or governments, for which investors receive regular interest payments. Bonds can provide a more stable investment option compared to stocks, with less volatility and potentially higher returns than traditional savings accounts. Bonds are often considered less risky investments compared to stocks.

For example, in Ukraine, since the start of the full-scale war, the use of Ukrainian government bonds (OVDP) has increased by 40%, while in developed countries, ordinary citizens have long used this financial instrument regularly.

Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) are another investment option on the U.S. stock exchange. ETFs allow investors to purchase a diversified portfolio of assets in one transaction. They are often used to track indices or sectors and provide a more accessible way to invest in a wide range of stocks, bonds, or commodities.

Source: Pixabay, author viarami

Exchange-Traded Funds (ETFs) are a relatively new class of assets that have gained popularity in recent years. These funds are designed to track the performance of a specific index or group of assets and trade on the exchange like stocks. These investment instruments provide diversification by holding a portfolio of stocks, bonds, or other assets. ETFs are traded on stock exchanges just like individual stocks, making them a convenient way to gain access to different sectors of the market.

There are many exchange-traded funds (ETFs) available to investors, covering a wide range of asset classes and investment strategies. The most well-known and widely recognized ETFs often track major stock market indices, commodities, or specific investment themes. Here are some of the most famous and popular ETFs:

• SPDR S&P 500 ETF Trust (SPY): This ETF tracks the S&P 500 index, providing access to the 500 largest public companies in the U.S.
• Invesco QQQ Trust (QQQ): Also known as the "NASDAQ-100" ETF, it tracks the NASDAQ-100 index, which includes the 100 largest non-financial companies listed on the NASDAQ stock exchange.
• iShares Russell 2000 ETF (IWM): This ETF tracks the Russell 2000 index, which represents the stocks of small-cap companies in the U.S.
• SPDR Gold Trust (GLD): This ETF tracks the price of gold, allowing investors to gain exposure to this precious metal.
• iShares U.S. Real Estate ETF (IYR): This ETF provides access to the U.S. real estate sector, tracking various real estate investment trusts (REITs).
• SPDR Health Care Select Sector ETF (XLV): XLV focuses on the healthcare sector, including pharmaceuticals, biotechnology, and companies that produce medical equipment.

For example, by opening an account with Fondexx, you can build a strategy for purchasing ETFs regularly and create an asset cushion that will accumulate your funds and gradually grow your capital.

Options and Futures Contracts

Options contracts are another class of assets available for investment on the U.S. stock exchange. Options and futures contracts are derivative financial instruments that provide investors the opportunity to speculate on market price movements. Options give you the right (but not the obligation) to buy or sell stocks at a predetermined price, while futures contracts obligate you to buy or sell an asset at a future date.

Options trading can be complex, but it also provides investors with a way to hedge against market volatility or earn income from their portfolios. You can learn more about options in our separate article: What is an Option?

Mutual Funds

Mutual funds pool money from many investors to invest in a diversified portfolio of assets. These funds are managed by professional portfolio managers who make investment decisions on behalf of the investors.

If you're interested in the topic of Mutual Funds, I recommend checking out our article on our blog: What is a Mutual Fund?

Real Estate Investment Trusts (REITs)

A Real Estate Investment Trust (REIT) is a company that owns, manages, or finances income-generating real estate. REITs provide individuals with the opportunity to invest in real estate without the need to purchase and manage physical properties. By law, they are required to distribute at least 90% of their taxable income to shareholders as dividends. REITs are traded on major stock exchanges, making them accessible to investors just like stocks. Here are some examples of different types of REITs:

• Simon Property Group (SPG): One of the largest retail real estate investment funds specializing in owning and managing shopping centers and premium retail locations.
• Annaly Capital Management (NLY): Annaly is a well-known mREIT primarily investing in mortgage-backed securities secured by residential real estate.
• American Tower Corporation (AMT): American Tower is a hybrid REIT that owns and manages a large portfolio of communication infrastructure and cell towers.
• Digital Realty Trust, Inc. (DLR): Digital Realty is a specialized REIT that focuses on data centers and hosting facilities.
• AvalonBay Communities, Inc. (AVB): AvalonBay is a residential REIT that specializes in apartment buildings.
• Realty Income Corporation (O): Realty Income, mentioned earlier, is known for its monthly dividend payments and diverse portfolio of retail and commercial properties.
• Boston Properties, Inc. (BXP): Boston Properties owns and manages a portfolio of office buildings in major metropolitan areas.
• Host Hotels & Resorts, Inc. (HST): Host Hotels is a REIT specializing in owning and managing high-end and luxury hotels.

Commodities

Source: Pixabay, author jp26jp

Commodities are raw materials or primary agricultural products that can be bought and sold through exchange-traded products (ETPs), such as metals, energy resources, agricultural products, etc. They are generally standardized and interchangeable with other goods of the same type. These instruments allow for influencing commodity price movements without the need for physical ownership.

Here are some examples of different types of commodities, along with a brief explanation of each:

• Gold is one of the most well-known and widely traded commodities. It is considered a precious metal and is often used for investment and as a means of saving due to its scarcity and intrinsic value. Gold is traded on commodity exchanges and can be purchased in various forms, including physical bars, ETFs, and futures contracts.
• Crude oil is a key energy commodity used as a primary source for producing gasoline, diesel fuel, and various petrochemical products.
• Soybeans are a major agricultural commodity used for producing food products, animal feed, and industrial purposes. Soybean futures are traded on commodity exchanges, and their prices can be influenced by factors such as weather conditions, crop yields, and international trade.
• Copper is a base metal used across various industries, including construction, electronics, and manufacturing. It is considered an indicator of global economic health due to its wide range of applications.
• Natural gas is another important energy commodity used for heating, electricity generation, and as fuel. Its prices can be influenced by factors such as weather conditions, production levels, and geopolitical events.
• Wheat is a major agricultural crop used for producing various food products, including bread, pasta, and cereals. Factors such as weather conditions, plant diseases, and international trade affect wheat prices.

Cryptocurrencies

Source: Pixabay, author WFranz

While not traditional securities, some stocks and funds related to cryptocurrencies are traded on U.S. stock exchanges, allowing investors to indirectly invest in the cryptocurrency market. For example:

• Amplify Transformational Data Sharing ETF (NYSEMKT:BLOK)
  • $419.2 million in assets under management. An ETF focused on companies related to cryptocurrencies or that provide indirect exposure to cryptocurrency prices.
• Bitwise 10 Crypto Index Fund (OTC:BITW)
  • $499.0 million in assets under management. A vehicle for easily investing in the top 10 cryptocurrencies.
• Siren Nasdaq NexGen Economy ETF (NASDAQ:BLCN)
  • $76.3 million in assets under management. An ETF that invests in companies developing and using blockchain technology.
• First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR)
  • $114.3 million in assets under management. A diversified fund containing cryptocurrencies, technology, banking, and international stocks.

Certificates of Deposit (CDs)

Certificates of Deposit are low-risk interest-bearing deposits offered by financial institutions. Although they are not directly traded on stock exchanges, they are part of the broader financial market and are a popular choice for conservative investors.

Certificates of Deposit are term deposit accounts offered by banks and credit unions, typically with fixed terms and fixed interest rates. They are considered low-risk investments with a fixed interest rate. Here are some examples of different types of certificates of deposit:

• Traditional Fixed-Rate CD: This is the most common type of certificate of deposit. You deposit a certain amount of money into a bank or credit union for a fixed term, which can range from a few months to several years. In exchange, you receive a fixed interest rate, usually higher than that on regular savings accounts. At the end of the term, you can withdraw your initial deposit plus the interest earned.
• Jumbo CD: A Jumbo CD is similar to a traditional fixed-rate CD, but it typically requires a larger minimum deposit, often significantly more than the average minimum deposit for regular CDs. In exchange for the larger deposit, you may receive a higher interest rate.
• High-Yield CD: A high-yield CD allows you to benefit from rising interest rates. With this type of CD, you have the option to "raise" the interest rate to the current market rate once during the term of the CD. This can be advantageous if rates increase during the term of your deposit.
• CD IRA: A CD with an Individual Retirement Account (IRA) is a type of CD held in an IRA account. These offer tax benefits for retirement savings and are available in both traditional and Roth IRA formats.

Foreign Stocks

American investors can also purchase shares of foreign companies listed on U.S. stock exchanges in the form of American Depositary Receipts (ADRs) or through international brokerage accounts.

Some companies with assets in Ukraine are also represented in the U.S. market, such as:

• Public Joint-Stock Company "Ferrexpo" (FXPO): Ferrexpo is a mining company with significant iron ore assets in Ukraine. Its ADRs are listed on the London Stock Exchange and also traded in the U.S. as over-the-counter securities.
• Coca-Cola HBC AG (CCH): Coca-Cola HBC is a beverage manufacturing company operating in many countries, including Ukraine. It is one of the largest Coca-Cola bottlers in Europe. Although the company's shares are primarily listed on the London Stock Exchange, its ADRs are traded on the New York Stock Exchange (NYSE).

Conclusion

In summary, the U.S. stock exchange offers investors a wide range of investment opportunities, from traditional stocks and bonds to newer asset classes such as ETFs and option contracts.

Understanding these various assets available on the U.S. stock market is an important first step for any investor. Each asset class has its own risk profile, potential return, and suitability for different investment strategies. To make informed investment decisions, consider your financial goals, risk tolerance, and time horizon.

Before you begin investing, it is recommended to consult with a financial advisor from Fundex or conduct thorough research to ensure that your investments align with your goals. Additionally, stay informed about market trends and economic events to make informed choices on your investment journey.