Is a stock an equity?

Question

i have just started investing. I read that the settlement date for U.S and Canadian Equities is 3 days after the trade is made. So is stock an equity or is it something else? also since settlement date is 3 days after does that mean i don't need to have the money in my account for 3 more days? lastly what were to happen if after 3 days i don't have the money required?

Answer 1

When you make the trade, the money will be taken out of your account and the stock will be placed in your account.  The settlement date just refers to the fact that the official title to the stock takes 3 days to be transferred to your name.  If a trade does not go through that day, the money will be held in your account and it will not be available for you to use in any other way.

Answer 2

You need to talk to your broker. If you buy stocks on credit, this is called margin. You pay interest for margin. If you don't put the $ in the account, the brokerage sells the position, and you owe them $ if it sells for less than you bought it. Talk to your broker so that you understand the implications of buying stock without having the cash. It is serious, and they can shut you down. Not all stock brokers sell on margin.

And, yes, stocks and ETF's are considered equities.