Finances – Understanding the 4 Main Areas of Financial Finance

Financial is a broad term encompassing several subjects about the financial management, development, and measurement of financial resources. Some popular financial topics are: financial planning (what and how you plan to spend your money), risk management (how to manage and protect your financial investments), budgets (how you plan to spend your money) and investing (the process of buying and selling securities in order to create wealth). Other more abstruse aspects of financial include understanding foreign exchange rates and the process of Forex trading. For the layperson, the topic of financial is probably best understood through the movies – where individuals or corporations make lots of money by trading currencies and/or investing in bonds. The movie Trading Places even shows the fictional firm, Pennywise, making large sums of money all the time.

A good business person with an understanding of financial management can help to create positive financial planning practices and can also provide advice on how to successfully invest money. With the right training, anyone can start a business that promotes financial planning and investment. The Internet provides a great way for you to learn about the topic of financial management and its applications. You can find a variety of websites that offer training on these topics, including beginner’s classes, advanced seminars, books, and even webinars.

Corporate finance includes the strategies, methods, and tools used to acquire, manage, and utilize capital assets. The most common types of corporate finance include: working capital loans (which provide small amounts of cash to corporate businesses), venture capital loans, mortgage banking, commercial real estate loans, and financial investments such as acquisitions and mergers. Many investors use corporate finance to acquire other types of assets. This type of financing can include making acquisitions of other companies, creating partnerships, and reorganizing businesses that are not making profits. The goal of corporate finance is to increase the value of the overall equity.

Behavioral finance is a term that is sometimes included in financial planning or applied research as a discipline that is used to study behavior of consumers and the characteristics of those who invest. Some of the areas of behavioral finance that interest people include decision analysis, decision support, forecasting, and portfolio management. Decision analysis is concerned with understanding why people make certain choices and how they decide to make those decisions. Decision support is all about planning for the future and finding solutions to problems. Forecasting deals with the future and helps you better understand why specific events may occur. Finally, portfolio management deals with the assets, liabilities, and positions of your total financial portfolio and is an area of specialized management that is usually done by investment managers or certified public accountants.