Personal Money Finance

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.


Personal money finance is a way to manage one’s cash balances. This can be done by the following processes:


Personal money finance is a way to manage one’s cash balances. This can be done by the following processes:

1. Banking
2. Investments
3. Planning

Banking: Money sitting idle would not earn any interest. Again one should avail the various lucrative savings options of banks. For all these purposes banking is required. The various banking options are:

Creating accounts and deposits: There are three kinds of accounts. They are the savings account, the current account and fixed deposits, which are detailed under the following heads.

    • Savings account: Aimed at encouraging savings for future purposes. Irrespective of the salary scale of a person, he may open a savings account in his name. 
       
    • Current Account:These are not interest bearing accounts. Here the account holder can deposit and withdraw any amount of money at his disposal, as long as there is money in his account.
       
    • Fixed Deposits: The account holder can borrow from his own account and also earn interest for the money deposited.

    Another way of managing personal money finance is investment in different items listed below.

    • Mutual funds:These are funds that attract the money of different investors to invest in equity or debit markets. 
       
    • Insurance plans:For financial security of our loved ones investment in life insurance policies are essential. Insurance policies are also available for houses, cars etc.
       
    • Bonds:This is the most secure investment path that gives stable returns accompanied with tax benefits.
       
    • Real Estate:Here money is used to purchase property, which can be used for personal purpose or leased out to earn some income. This investment is subject to capital gain or loss as the value of property may fluctuate. Real estate may be of two types: 1.Residential real estate 2.Commercial real estate 
       
    • Money market securities: They are the most safe and liquid form of investment available. Investors who are risk-averse invest in such securities and they function through the money market dealers money center banks and Open Market Trading Desks. The money market securities are Treasury Bills, Certificates of Deposits, Commercial Paper and Money Market Funds.
       
    • Common stocks: Common stocks are the ordinary shares held by the public in the corporation. The stocks that can be repurchased are known as treasury stocks. These stocks are the last in the liquidity line. They receive their dividends after the preferred stockholders.
       
    • IPOs: The Initial Public Offering is the first sale of the common shares of an organization in the public stock exchange. When the shareholder sells the shares then it is called the secondary offering, which occurs in the secondary market and earns the shareholder profit or a loss.
       
    • DPOs: This is the Direct Public Offering of a company directly to its employees and customers. The DPOs are less costly in comparison to the traditional underwritten offerings.
       
    • Retirement Planning: Retirement planning is essential to understand the amount of money that would be required at the time of retirement. In order to plan for retirement one must identify his personal goals. If one has plenty of goals he should arrange them according to priority. For this it is important to determine whether the expenditures made today will be carried forward tomorrow. It is important to know whether expenditure on commuting, clothing, medicines would change. Not only is knowledge of expenses is important in making retirement plans, but one should also be aware of the expected inflation rates at the time of retirement.

       

    These are funds that attract the money of different investors to invest in equity or debit markets.

    For financial security of our loved ones investment in life insurance policies are essential. Insurance policies are also available for houses, cars etc.

    This is the most secure investment path that gives stable returns accompanied with tax benefits.

    Here money is used to purchase property, which can be used for personal purpose or leased out to earn some income. This investment is subject to capital gain or loss as the value of property may fluctuate. Real estate may be of two types:

    1.Residential real estate
    2.Commercial real estate

    They are the most safe and liquid form of investment available. Investors who are risk-averse invest in such securities and they function through the money market dealers money center banks and Open Market Trading Desks. The money market securities are Treasury Bills, Certificates of Deposits, Commercial Paper and Money Market Funds.

About EconomyWatch PRO INVESTOR

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