» Personal Finance
It is likely that only those who have been living on a desert island who haven’t at least heard about the stock market. But what are these stocks and are they a good investment? There are actually a number of different types of stocks including; preferred stock, common stock, and treasury shares. We will look at each of these in turn, but first we will need to make sure that we understand what is meant by stock.
As you can probably imagine from its name, predatory lending is an unfair way of lending money. Most people will have heard words like ‘loan shark’ used before and this is a good description of predatory lending. The people involved in this business can make a lot of money for themselves, but they can also make life very miserable for those who are unlucky enough to have borrowed money from them. This is not just something that happens in movies; people do end up with ruined lives because of this type of lending. Even in civilised place like the UK you will find plenty of people involved in this type of illegal business.
Those who have spent any time waiting in line at a bank in the UK or otherwise paid any attention to financial advertisements will almost certainly have heard about ISA’s. Those individuals who find saving easy and always likes to invest in the future are likely fully aware of this financial product. Many people though, will have heard about ISAs but will have no real idea about what this actually is all about. They may have a vague idea that it is something to do with investing or saving money, but have no real idea about the benefits of this type of product.
The future can seem a whole lot brighter if you believe that the finances are going to be there to allow you do the things you want to do. Securing the future does not mean saving every penny now so that you can have a few nice years before you die; the real trick is to manage your finances so that you always have a bit of money throughout the rest of your life. It should be remembered though, that it is a lot easier to be poor when you are young than it is when you are older.
Questions in personal finance revolve around:
One is said to hedge a risk when the action taken to reduce one’s exposure to a loss also causes one to give up of the possibility of a gain. For example, farmers who sell their future crops before the harvest at a fixed price to eliminate the risk of a low price at harvest time also give up the possibility of profiting from high prices at harvest time. So, they are hedging their exposure to the price risk of their crops.
There is a fundamental difference between insuring and hedging. When you hedge, you eliminate the risk of loss by giving up the potential for gain. When you insure, you pay a premium to eliminate the risk of loss and retain the potential for gain.
Finance is all about time and risk. It’s basically a study of how people make decisions regarding the allocation of resources over time and the handling of risks of them. Playing with it requires some very fundamental techniques and strategies, which are all indispensable if not enough for success in financial markets. And the idea of present value is one of the most important that will help you value financial assets over time thus making choices between current resources and future gains.
EconGuru Library
Educating the public since 2006.