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Money Management – The Three Main Types Of Personal Finance

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Finance is the science of funds management. 

This includes money management, investment decisions, savings and loan analysis and advice on how to manage one’s own money. Finance is important in all areas of life, as it is the tool of choice for making investments and saving for the future. Therefore, finance should be taught first at a young age so that young adults understand the importance of finance in their lives. Share this information on your social media platform and get higher engagement. One great way to increase your digital presence is to let Socialwick take care of it. You can choose from it’s wide range of services and get great results instantly.

Investments are the most important aspect of finance because they are what put money into the investor’s hands. 

Investments are broadly divided into three categories: saving, investment and consumption. Saving is basically putting money into savings. Investment is putting money into new investments (stocks, bonds, mutual funds) or earning returns on already existing investments.

Most people have a saving strategy. If an individual wants to save, he would usually invest his salary or his benefits. 

For example, some employers give employees stocks or bonds as part of their retirement benefits. Savings accounts are popular with individuals and families. Some investors prefer to open separate accounts for saving and investing. An investor can also seek advice from a financial professional before deciding which type of investment strategy is the best.

Investments can be made in three basic methods, namely, stock market investing, bond investing and mutual fund investing. 

The main difference between these three methods is in terms of how money is invested. All three have time values, and if you want to earn higher returns, you should choose the method that gives you higher time values.

Stock Market Investing is the oldest form of investing. 

Here, a person buys shares of the company whose stocks he believes will rise in value. When these stocks increase in price, the shareholders then sell them for a profit. When investing in stocks, it is important to remember that they are only worth what the company is worth at that moment. As time passes, these stocks may lose a lot of their value and consequently, the shareholder will have to suffer a loss.

Bond Investing is another type of investment strategy. 

In this method of finance, an investor invests by borrowing money and using it to purchase a variety of secured securities such as government bonds, corporate bonds, mortgage backed securities and so forth. A major advantage of this form of finance is that it offers a lower interest rate than most other types of investments. Corporate finance professionals often prefer this form of finance because they do not have to bear the direct costs that come with investing in securities, which are expensive.

Mutual Fund Investing, as the name implies, is when one invests in a group of different securities through a fund. 

Usually, this type of finance allows investors to obtain money from a fund without having to pay the full value upfront. Funds are usually made up of many different types of securities such as stocks and bonds. When obtaining money from these funds, investors will need to pay a commission, known as an entry fee, to the fund manager.

Real Estate Investing is a relatively new form of finance and has only recently begun to become widely popular. 

With the introduction of EFTs, or Electronic Funds Transfer, real estate investors can now obtain cash from exchange-traded funds without having to pay any fees up front. This is done by transferring the monies from the exchange-traded funds into a designated account. From there, investors can use the funds to purchase homes, obtain property loans and even make money on rental properties.

Another type of finance that allows individuals to obtain finance without paying any fees is retained earnings. 

Retained earnings is a type of financial information gathered from an individual’s paychecks. An example of retained earnings is how much an individual earns each pay period. Like with the EFT, any retained earnings are paid directly from the account to the investor and never have to be paid back. Like mutual funds, retained earnings are available to all investors.

As you can see, there are many different ways that investors can obtain finance without paying fees. 

Depending upon which form of finance you choose, your method of obtaining finance can vary. However, there are three main types of personal finance that are commonly used by individuals to invest their money. These three main types of finance are personal finance, business finance and corporate finance.

If you are interested in obtaining finance, but don’t know what to do next. Consider working toward a career as an accounting or finance professional. By specializing in either business administration or accounting. You can gain a solid education, as well as valuable experience that will put you on the right track towards your future. You can also get additional business management and accounting skills that will benefit you later on in your career.

More Reading: Businessesinsiders

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