Finance, Financing

By: EconomyWatch   Date: 30 June 2010

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Finance is a branch of economics that deals with the management of funds, financial resources and other assets. In broader terms, finance is raising or investing money either as equity or debt. Finance is a wide-ranging term which includes funding, investments, trading and risk management (through various types of insurance policies).

Finance: Financial Assets

Finance involves investment of funds in financial assets, such as stocks, bonds, mutual funds and private equities for income generation. Financial institutions like banks play a major role in funding these financial assets. Investment in financial assets is generally extensive so it must be protected by risk management and risk transference organizations like insurance companies.

Finance: Types

Personal finance focuses on the extent of funds that are required by a person or a family. This further includes protection from mishap, transfer of assets through inheritance and the impact of tax policy on personal finance. Personal finance also includes financial planning and access to credit.

Corporate finance: This type of finance uses the principles of finance to help corporates raise funding and to help investors earn good returns from meeting those funding needs, usually with the help of corporate bankers or financiers. The objective of corporate finance is to maximize the valuation of financial assets, while striking a balance between the risks and profitability potential of the assets. Corporate finance takes into account the valuation of financial assets primarily for tax assessments and business analysis. Corporate houses focus on making either long-term capital investments or managing working capital for the short term. It also involves finding short- and long-term funding for corporations. While short-term funding can be obtained from banks’ line of credit, funds for the long term can be acquired by issuing equity or bonds.

For investors who want updates and advice on any financial matters such as savings, investment, retirement planning, portfolio management and asset management, it is best to seek financial advice from a trustworthy financial advisor.


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