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Simple Yet Confusing Financial Terms

George Sterling | Thursday, January 24th, 2013

There are many financial terms within the finance industry and in order to understand how the industry works, it is important to at least have knowledge about basic financial terms. Here are some very basic financial terms explained which can cause confusion some times:

Capital Management

The term is actually an account strategy which has the primary goal of balancing the level of current working capital with its current liabilities and assets. Capital Management is there to help businesses understand and ensure that their expenses are being met responsibly and the revenues are kept adequate. A lot of financial companies out there can help your company understand and manage the capital resources within short and long term planning. It mostly involves managing the accounts receivable and payable with some sort of inventory management added to the mix. Your financial advisor can help you operate the company at reasonable expenses.

 

Asset Management

Asset Management is the management of physical assets owned by a company or individual. It involves professional management of any investments including bonds, real estate and stocks. Asset management is usually recommended to individuals having a very good financial standing. Asset management is offered by banks and many financial institutes, but it involves a long and tough process which should be handled by a professional. This is why it is highly recommended to work with a financial advisor who has experience in asset management. Your financial advisor should know what goals you plan to achieve in order to get you good results.

Investment Management

Investment management is a term that refers to a technique that involves investing large sums of money to make a good profit. In this case, usually an investment manager is involved who is responsible for investing the money for you in order to make profit. This professional individual will also try to make a profit for their organization through your money. The profit made for their organization does not count as a fee for the investment manager; in fact a set fee is always applied. Investment management is basically all about growth of money that you place for the investment manager to use. The money can come from a variety of places including pension plans and asset management.

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