The Financial Services Industry For Beginners

Finance is the creation, study and management of money. It is basically a term for matters including investments, budgeting, banking and any other activity in relation to managing money. The Finance Industry encompasses a broad range of financial services today. These include stock brokerages, credit investment funds, insurance, and many others.

One of these many services is Portfolio Management. It includes making decisions about investments and carrying out investment activities on behalf of vested organisations. An investment advisorperforms these duties for the organization.  A registered Investment advisor advises the businesses about investments and manages their investment portfolio. Their main goal is to maintain business activities and optimize the return on investment.

If we talk about the current scenario, Mutual Funds has become one of the most popular financial services. Mutual Fund is basically an investment fund which brings together money from investors and invests it in securities like bonds and stocks. Financial service offerings in this segment are primarily offered across 3 categories; Equity, Fixed-income, money market funds. However, there happens to be a fourth type in this category ; Balanced and Hybrid funds which include both stocks and bonds.

While many people question the safety of mutual funds, advisors claim that mutual funds are quite safe. However, Investors need to invest in a fund that is in sync with their investment goal. They are also usually advised to invest with a long-term horizon. Mutual Funds have witnessed remarkable growth over the years. This is due to the lower buy-in compared to stock market and debt products. It is therefore also known as a low-risk wealth multiplier.

One other popular service provided by the financial institutions is Insurance. Insurance is a financial protection, represented by a policy that an entity receives in case of a possible eventuality. The insured receive an insurance cover against the premium paid by them. This service includes the following types; Life Insurance, Property Insurance, Marine Insurance, Fire Insurance, Liability Insurance, Guarantee and Social Insurance. However, these are categorized based on the risks, type and hazards. Every individual is advised to at least possess life insurance.

Tax/audit consulting is also one such service provided by thefinancial services sector. It includes preparing tax returns and advising the client on their  tax liabilities. These tasks are carried out by tax consultants, also known as tax advisors. They specialize in professional tax law, planning and compliance. Tax advisors work with their clients throughout the year and plan strategies to ensure that their client’s tax liability is minimized. They help their client in structuring their finances from top to bottom.

However, the Financial sector is undergoing rapid expansion with new entities entering the market. The authorities have introduced several reforms to liberalise, regulate and enhance this industry.

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