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What is non marketable security

What is non marketable security? Non marketable vs marketable securities

by Samson

Have you noticed that you can not sell all securities in the market? Well, do you know what is non-marketable security?  As well as what is marketable security? Well, here we will understand what is non-marketable security? Features of non-marketable security, Examples of Non-Marketable Securities as well as what is marketable security? And Examples of Marketable Securities with Advantages and disadvantages of non marketable securities. And notice marketable vs non marketable securities.

So, let us first understand the meaning of what is non-marketable security?

  • What is a non-marketable security?

A Non-marketable security denotes an asset that is difficult to buy or sell as they are not traceable on any major secondary market exchanges. Therefore, it is a security that is not traded on any major securities exchange. These securities are often found in form of debt or fixed-income securities, which are usually purchased as well as sold using private transactions or at the over-the-counter (OTC) market.

Here, finding a buyer can also be a difficult task as some non-marketable securities are not able to be resold because the government protocols prohibit any resale. Therefore, these Non-marketable securities are in contrast with the marketable security, which can be exchanged as well as traded very easily. Further, some marketable securities as per the government rules and regulations cannot be sold at all.

  • Features of non-marketable security:

Some of the features are as follows:

  • Non-marketable securities are treated as illiquid assets or securities which cannot be easily liquidated into cash or cost-effective manner.
  • There is no active secondary market involved for these securities and are only trade on over-the-counter exchanges.
  • They cannot be bought or sold on a public exchange or at the over-the-counter (OTC) market.
  • It most probably includes stock, Treasury bills, and money market instruments.

  • Examples of Non-Marketable Securities

Some of the common Examples of Non-Marketable Securities are:

  • Savings Bonds

Under the Saving Bonds as non-marketable security can only be cashed by the person whose name is mentioned on the documents of the non-marketable security or the Saving Bonds at the time of purchase.

  • State and Local Government Securities

Under the State and Local Government Securities a certificate of indebtedness is issued where the maturity period of 15 – 40 years is there. And the Interest in Non-Marketable Securities is grown on a daily basis.

  • Shares in Limited Partnership

Under the Shares in Limited Partnership, the shares of the Limited Partnership are treated as Non-Marketable Securities as they are difficult to sell off in the market.

  • Private Shares Held by Owner Company

Under the Private Shares Held by Owner Company, the shares are held by the owner companies which are non-marketable securities and are traded on stock exchanges.

  • Bank and Post Office Accounts

Under the Bank and Post Office Accounts option, they are non-transferable and non-marketable options to consider.

  • Other common examples also include:
  • Certificates
  • Federal Government bonds
  • Government account series
  1. These examples can also be stated as non marketable financial assets examples as they include savings bonds, rural electrification certificates, private shares, state and local government securities, etc only.
  2. Further, examples of non security forms of investment also include art, rare coins, life insurance, gold, and diamonds which can not be listed on the stock market and are difficult to trade.
  • What is marketable security?

Marketable security denotes an asset that is easy to buy or sell as they are traceable on any major secondary market exchange. Marketable security is quite opposite of what is non-marketable security?

Equity shares, bonds, mutual funds are some of the examples of marketable security.

  • Examples of Marketable Securities:

Some of the common marketable securities examples are:

Common Stock

Commercial Papers

Banker’s Acceptance

Treasury Bills

Certificate of Deposit

other money market instruments

  • Marketable and non marketable investment avenues

Some of the marketable and non marketable investment avenues include:

  • Equity Shares

Equity Shares further includes:

  • Blue chip scrip
  • Growth scrip
  • Income scrip
  • Cyclical scrip
  • Speculative scrip
  • Debentures or Bonds

Debentures or Bonds further includes:

  • Government securities
  • Savings bonds
  • Public Sector Units bonds
  • Debentures of private sector companies
  • Preference shares
  • Money Market Instruments

Money Market Instruments further includes:

  • Treasury Bills
  • Commercial Paper
  • Certificate of Deposits
  • Mutual Funds

Mutual Funds further includes:

  • Equity Schemes
  • Debt Schemes
  • Balanced Schemes
  • Sector Specific Schemes etc.
  • Derivatives

Derivatives further include:

  • Forwards
  • Futures
  • Options
  • Swaps etc
  • Life Insurance and General Insurance

Life Insurance and General Insurance further includes:

  • Endowment Insurance Policy
  • Money Back Policy
  • Whole Life Policy
  • Term Insurance Policy
  • General Insurance 
  • Non-Marketable Securities

  • Bank Deposits
  • Post Office Deposits
  • Company Deposits
  • Provident Fund Deposits

 

  • Advantages and disadvantages of non marketable securities

Some of the Advantages and disadvantages of non marketable securities are as follows:

  • Advantages of non marketable securities

Some of the advantages of non marketable securities are:

  • A guaranteed rate of return is provided by non marketable securities.
  • The rate of return provided by non marketable securities is then marketable securities. 
  • Investors rarely lose their money in these securities.
  • They can also be purchased as a gift for a minor.
  • Disadvantages of non marketable securities

Some of the disadvantages of non marketable securities are:

  • They are non-liquid form which cannot be easily converted into cash.
  • Some of the non-marketable securities are also non-transferable.
  • There also exists a certainly of loss in these markets.
  • Marketable vs non marketable securities

Some common difference as of marketable vs non marketable securities is as:

Marketable securities Non-marketable securities
Marketable securities can be marketable securities Non-marketable securities cannot be marketable securities
Marketable securities have a market value. Non-marketable securities do not have a market value. 
Marketable securities involve high risk as market fluctuate.  Non-marketable securities have ow level of risk and return is also high.

  • Is an IRA marketable security?

An IRA is typically an investment account, and not an investment, therefore. You cannot treat IRA as marketable security which cannot be sold.

Frequently Asked Questions related to what is non marketable security:

  • Is an IRA marketable security?

An IRA is typically an investment account, and not an investment, therefore. You cannot treat IRA as marketable security which cannot be sold.

  • What are examples of marketable securities?

Marketable security denotes an asset that is easy to buy or sell as they are traceable on any major secondary market exchange.

Examples of Marketable Securities:

Some of the common marketable securities examples are:

  • Common Stock
  • Commercial Papers
  • Banker’s Acceptance
  • Treasury Bills
  • Certificate of Deposit
  • other money market instruments
  • What is non security?

Non security can be stated as an alternative investment that is difficult to buy or sell as they are not traceable on any major secondary market exchanges. Therefore, it is a security that is not traded on any major securities exchange. 

Conclusion:

Thus, by now we know what is a non-marketable security? Features of non-marketable security, Examples of Non-Marketable Securities as well as what is marketable security? And Examples of Marketable Securities with Advantages and disadvantages of non marketable securities. And notice marketable vs non marketable securities. A Non-marketable security denotes an asset that is difficult to buy or sell as they are not traceable on any major secondary market exchanges. Therefore, it is a security that is not traded on any major securities exchange. These securities are often found in form of debt or fixed-income securities, which are usually purchased as well as sold using private transactions or at the over-the-counter (OTC) market. So, we have understood what is non-marketable security?

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