Financial planning Narrative Essay
Investment is not as simple as it seems. For, abounding bodies about admiration which of the altered types of advance processes will crop added money in the beeline accessible time(Weston, 1996). Bodies about agree the activity of investments in agreement of abounding factors including safety, risk, income, growth, and liquidity. The afterward paragraphs explain these accommodation authoritative factors in detail.
Stock or Disinterestedness Financing. The broker will feel safe if he invests in a aggregation that has a actual trend of breeding profits(Gapenski, 1997). For, he gets a allotment of the assets if the aggregation makes money. On the alternative hand, the broker will accept a aerial probability of abandonment his or her money if the aggregation he or she invests in has been breeding losses for the accomplished year or years of operation. To reiterate, he will accomplish assets if the aggregation generates income. Also, he or she will acquisition his or her advance money abatement if the aggregation generates losses.
For, his or her advance in stocks or disinterestedness costs will abound if the aggregation generates profits in its breeding activities. Thus, if the aggregation generates losses, the aggregation will stop growing in agreement of net assets. If the assets of the aggregation are liquid, again this is a acceptable investment. Clamminess is how actual abreast the assets like inventory, accounts receivable and the actual alternative assets can be calmly adapted into cash. Banknote is the best aqueous asset. The broker is the stockholder or buyer of a assertive allotment of the company. Surely, approaching assets is unpredictable.
Corporate and Goverment Bonds. The broker will feel safe if the aggregation he lends his money has been breeding assets for the accomplished year or years of operations for there is able anticipation that the aggregation will accept abundant money to pay the band investor. Evidently, this is a lender (investor) & borrower (loaner) relationship. Likewise, if the aggregation is breeding profits for the accomplished years, again there a miniscule accident that the creditor will be paid back the due date for accommodation acquittal arrives.
The assets of the broker actuality is based on a pre –agreed absorption rate. Thus, approaching absorption assets can be predicted. The advance is predictably anchored based on the alternate absorption assets amount agreed by the parties. Advance actuality is actual aqueous because the broker accustomed anchored absorption assets on the money he lent to the company. Definitely, advance actuality is actual predictably fixed.
Mutual Funds. Here, money from a accumulation of investors is calm and invested in bonds, stocks and alternative abbreviate appellation money bazaar balance and instruments. This is a safe advance because the alternate funds are invested by an able third affair in stocks, bonds or banknote options such as Euro dollar, and alternative adopted currencies in what we alarm advanced contracts. Thus, investments actuality are safe and the accident is actual minimal. The assets is actual assured because money is invested in several assets -generating companies.
The alternate armamentarium assembly are about experts in giving admonition on which funds to advance money in. The alternate armamentarium adviser gathers abstracts and analyzes the peculiarities of anniversary armamentarium and determines the optimal mix of balance and communicates this to the investor. Consequently, money invested actuality will abound fast because of the able administration of the alternate armamentarium advisors. Finally, clamminess is reassured because the money invested in the altered funds can be calmly bald and the banknote advance withdrawn. Clearly, approaching assets actuality is unpredictably in the investor’s favor.
Real Estate. Investment in absolute acreage is actual safe because the bazaar amount of acreage continues to amplify upward. Thus, there is a actual baby accident in absolute acreage investments. Advance in acreage is actual reassured because acreage prices abide to acceleration anniversary year. Furthermore, advance will assuredly disentangle anniversary year. This advance is actual aqueous because, acreage can calmly be awash and adapted to banknote anytime of the day. Advance actuality is actual lucratively predictable.
Four of the added accepted advance methods are 1) Stock or Disinterestedness Costs 2)Corporate and Government Bonds 3) Alternate Funds 4) Absolute Estate. The basal band actuality is that the broker in absorbed to apperceive if he or she will accomplish money from advance his or her adamantine becoming banknote and banknote equivalents. In conclusion, anniversary broker will about accept the adjustment which he or she is actual adequate with.
Weston et. Al., Essentials of Managerial Finance, Dryden Press, New York, 1996
Gapenski, L., Brigham, E., Financial Management, Dryden Press, New York, 1997
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