Personal Finance and Business

By: EconomyWatch   Date: 30 June 2010

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The core Content Team our economy, industry, investing and personal finance reference articles.

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Unlike personal finance, business finance or corporate finance deals with funding corporations.

There are two kinds of business finance:The long-term business finance is provided by the ownership equity or bonds. Such decisions are governed by the capital structure of the company.

Short-term business finance provided by banks fulfills the working capital needs of the company.
Here is providing you comprehensive information on Business and Personal Finance


Bond market

In the Bond Market, the corporate bodies sell bonds, which bear the promise that the bondholder would have to repay the face value along with the interest. The ownership of the bond may change over time since the bondholder can resell it.

Another important aspect of business finance is fund management. In investment management before choosing a proper investment portfolio, one needs to investigate about the proper time and magnitude of investment. To fulfill this objective the following is needed:

Identifying the business financial goals, the level of risk aversion needs to be measured in diversifying portfolio.Formulating an appropriate hedging strategyReviewing the performance of portfolio.

Personal finance throws light on the personal financial planning. It weaves in the principles of finance in the monetary decisions of different individuals or family units. It includes concepts like financial planning, spending and credit management, income and asset protection, income and money management, so on and so forth. It basically shows the path in which a family can formulate their budget. It also helps them to optimize savings and spending taking into consideration future financial risks.

The most important element of personal finance is financial planning which necessitates monitoring and re-evaluation on a regular basis. This has the following five steps:Assessment: The personal financial status of an individual can be assessed by maintaining financial balance sheets and income statements. A personal balance sheet shows the personal assets and liabilities. The cash flow statement shows the personal income on one side and expenses on the other.

Setting Goals: One should set both long and short-term goals in any financial planning.

Formulating a Plan: After the goal is set one should formulate an appropriate plan to accomplish this goal.

Monitoring and Re-adjustment: The personal financial plans should be checked from time to time and necessary adjustments should be made.

Personal finance include issues like budgeting, banking, investment, retirement planning credit and debt, fraud, insurance, saving, mortgage and other loans, taxes, estate planning etc. These issues are discussed in detail under the following heads.

Budgeting: One should keep an account of the income and expected expenditures to meet the different financial goals.

Banking: Money sitting idle would not earn any interest. Again one should avail the various lucrative savings options of banks.

Investment Planning: For money to grow and protect it from the rising inflation, the best way out is to invest.

Retirement Planning: This process determines the amount of money that will be required at the time of retirement.

Credit and Debt: One should try to get out of bad debts and save. He should also keep track of his credit report.

Insurance: Mortality is ambiguity. Death of any earning member in the family gives a severe financial jolt. Such risks can be hedged by opting for a life insurance policy. Automobile and home insurance schemes are also available.

Mortgage and other loans: Property mortgage and other loans can be taken to pay back debts.

Tax: It is very important to plan taxes at the beginning of the current year rather than be burdened by the investment load. By investing in mutual funds one can save taxes.

Estate planning: Investing in real estate can also be very much beneficial.


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