Finance is a vast field which we interact with every now and then. The term finance can be simply stated as activities related to banking, money, investments, capital markets, and leverage. So, it is all about managing the money while looking into the possibilities of multiplying the existing funds as well. Financial intermediaries are institutions that look into the funds of the savers and interact with users.
Commercial banks, savings banks, savings and loans associations, and also non-bank institutions like credit unions, and insurance and investment companies can be given as examples of financial intermediaries. Finance can be mainly divided into three personal finance, corporate finance, and public finance. No, we will look a little deeper into these financial services and their significance of them.
Personal finance is one of the important types of financial service. It is all about managing the finance of a particular individual and assisting them in the process of achieving all of their targets in savings and the investments are done. Personal finance can differ from one individual to another according to their targets, requirements, time period, and the strategies used as well.
Investing in assets such as properties, real estate, vehicles, life insurance policies, and medical insurance comes under personal finance. It also covers the process of purchasing financial products like credit cards, mortgages and mortgage refinance as well. And it can be simply explained as the process of replacing a mortgage you currently have with a new mortgage that will provide more benefits. Transfer of wealth, managing taxes, and paying for loans are also included in personal finance.
Funding a particular company’s expenses and building the financial structure can be stated as corporate finance. So, all the financial activities related to establishing and running a company comes under corporate finance.
Allocation of funds for resources and company-related activities and increasing the value and the goodwill of the company by improving the financial position are the main aspects of corporate finance. Some other important activities which come under corporate finance are budgeting the capital, investing in the stock market and other assets, identifying financial opportunities, and also the management of risks.
Public finance is the type of finance related to states, provinces, and simply all finances related to the government. All long-term investment decisions related to public entities are included in the public finance. Distribution of income, economic stability, and resource allocation are the main factors that are considered when taking decisions related to public finance.
Funds for the financial activities of public finance mainly come from taxes, banks, and insurance companies. Identifying and making plans for public projects, finding sources of revenue for them, and management of taxes are some other important tasks included in public finance.
These are the main types of finance and financial services. Micro finance and trade finance are other two types of finances that can be seen commonly. Having some kind of idea on this will always be a benefit in the future.