Money for transaction purposes Essay - 2750 Words

Money for transaction purposes (Essay Sample) Content: NameInstructorCourseDATE \@ "d MMMM yyyy" 26 June 2014Question ARational Individuals should only hold non-interest bearing money for transaction purposes.Investment BenefitsAlthough money is not the most significant thing in life, sometimes it is of need. The issue on the way of spending money is sometimes a very challenging task. There are individuals who are great money spenders (Kaplan Zingales) while others know how to spend their money carefully. In life, there are different ways that lead to the need for one to spend money (Khattak Rouphail). Some individuals are not big spenders and they care on how they spend their money because of various reasons like when one is not working and in that case (Lamont 95) the parents are the provider. In this case, one will save the money their parents provide for the future (Pine Tart 13). Saving money for the future is very important for no one knows when the need for its use would arise (Khattak Rouphail). Various people have different ways of spending money, there are those who spend majority of their money on food, shoes, makeups, (Lamont 100) clothes and such things, but all along they should consider looking for supplies as well as discounts as it is a pretty method of saving money (Globerman 50). Some people do not buy a lot of things but rather prefer using their money in travelling and also in going out with their pals as well as their families (Pine and Tart 13), discovering new places or use their money on doing interesting things since material things can stand with for a moment but memories do last forever (Khattak Rouphail)Before an individual commence on a journey to build wealth and also find financial independence, it is of (Pine Tart 13) importance to have an understanding of some basics. Among the keys to understanding is the meaning of the two related, but independent terms, that is, saving and investing (Kaplan Zingales). These two terms should never be confused at any given t ime. Rational individuals might find themselves having a dozen of real estates for rental properties but the same person finds it difficult to complete his bills if he did not consider balancing the two acts between foundations of success. It is always of help if a new investor starts by understanding the difference between investing and saving.The term saving refers to the act of putting cold or hard cash separately and then putting it in extremely secure (Kaplan Zingales), and liquid accounts or securities. The term "liquid" means that the cash can be accessed or sold in a very short period of time or at most in a few days (Khattak Rouphail). This may consist saving accounts, FDIC insured, short-term certificates of deposit, checking accounts as well as the US Treasury Bills (Lamont 123). This can as well comprise FDIC protected cash market accounts but market funds should not be inclusive as they are not insured. The main aim for these resources should be investment conservatio n, having a secondary goal of keeping pace with inflation, if need be (Khattak Rouphail).On the hand, Investing refers to the process of using money or rather capital to purchase an asset that an individual thinks (Pine Tart 13) will lead to an acceptable and safe return over a particular period of time, making one richer with every passing year (Pine Tart 13). Investments may consist of anything arising from infrequent wines to gold coins, from a small business to acceptable art, amusing books to stocks, (Lamont 83-109) real estate, mutual funds, antiques, bonds, just to list a few. Investment may as well include patents, trademarks (Pine Tart 13), song rights, patents, or any other intellectual property. The following are factors that rational individuals need to examine for there to be a success (Lamont 99).Fundamental documents:A strategy or structure that arrange the route of business organization modification great grade plans (Lamont 105) for coming up with that strategy m anagement outline confirmed by business and skilled strategies key skills required for locating instruction, the strategy management for business concern, management for Information Systems strategy, as well as a workspace management and strategy. A strategic plan enables an establishment to conduct their task to the best of their ability (Lamont 106).The Board is accountable for the strategically routine of the entity of the public. This owns up approval and re-examining of the public entities intended approach, apparently incoming a long term physical policy (Pine Tart 13) and coming up with an annually business plan alongside the measurable and manageable objectives and also milestones (Khattak Rouphail).Strategic planning sometimes demands the entity key shareholders from the public. The strategic plan ought to obtain a strategic administration as well as vision in response to complete examination environment (Lamont 85), logical thinking and make sure that all the members of the business are working towards a similar goal. The board should be transparent when conducting their activities (Khattak Rouphail).There are times when the Boards decide that due to some available material in the business plan, may be thought to be of commercial grade. Only the corporal determined management should be put (Lamont 102) into effectiveness. The board regularly brushes-up and also updates its plans. Relevant legislation requires entities of the public in order to achieve a strategic plan.The key features of the strategic management consist 1 The capability to overextend chances and retort to external changes by taking continuing planned (Lamont 83) choices mechanism for the answerableness to the citizen available in the meeting for their first time, and also the midpoint in achieving plan aims as for the ordered outline for managing risk (Khattak Rouphail).There are various reasons as to as to why rational individuals (Khattak Rouphail) save their money. Below are some examples.1. Save for Emergency FundsUnexpected expenses happen unexpectedly and, therefore, it is necessary to set aside emergency fund in order to cover for the expenses when they occur. Such unexpected expenses include sudden job loss, unexpected car repair or your emergency appendectomy (Khattak Rouphail). Preferably one is advised to have an emergency fund that amounts to around (Globerman 52) three to six months of their expenses. In addition to keeping aside emergency fund one, also requires to ensure that they have a good and planned insurance in place to aid them endure the unpredicted financial dealings in your life (Pollin Heintz ).2. Save for RetirementAnother significant reason for saving money is for retirement purposes. A rational person should (Lamont 109) start saving earlier as it makes one save less in the future. When one reaches the retiring age, they are able to enjoy their savings as they can as well start businesses with the saved cash (Lamont 88).3. Sa ve for a Down Payment for a HouseThe third reason as to why a rational person should save cash is for buying a house using the down payment. The negotiating power proceeds farther when an individual has a noteworthy down payment towards his home. One is able to receive good interest rates thus being able to afford bigger homes. Depend on individual circumstances, one is able to determine how much they can save towards this.4. Save for Vacations and Other Luxury ItemsThe fourth reason as to why one saves cash is to have fun. An individual can save cash for a tour of Europe or the Caribbean cruise (Pollin Heintz). In addition, one can save for pleasure as buying large ticket items like a new boat or Play station 3 (Pine Tart 13).5. Save for a New CarAnother reason why an individual should save is to be at a point of purchasing a car with that cash. This enables one to be free from the budget of a car payment. (Pine Tart6. Save for Sinking FundsThe sixth reason is for a person to set up their sinking funds. This is the money that an individual sets aside for repairing or for improving possessions such as cars, home, etc. This planning helps individuals to stop interfering with their emergency fund when the need arises as on the issue of fixing a car or renovating a house (Pollin Heintz).7. Your EducationThe last but not least reason for saving cash is for an individualà ¢Ã¢â€š ¬s future education. Every year a lot of people go back to school in order earn their doctorate or masters degrees (Lamont 102). In addition, a rational person should start saving for their childà ¢Ã¢â€š ¬s education as soon as possible (Pollin Heintz). This reduces the risks of the child not getting the best learning facilities especially when the parents lose their jobs (Pine Tart 13).Personal Development as a rational person "Strategic Managerà ¢Ã¢â€š ¬Ã‚ One should be capable of identifying their personal skills in order to attain strategic ambitions.As a rational person, it is of importance to check deliberate association of the business organization and its adjustment go-getting nesses. As a result of changing direction, an assumption should be made on business scheme as well as visualization for the succeeding (Lamont 100).Investment bankingThe extremely competitive and action-oriented world of investment banking appears as a larger-than-life place where fortunes are made and deals are carried out. Investment bank includes though (Kaplan Zingales) it is not restricted in bringing a recognized business into the business. This only implies picking the company with the abilities rather than resources of increasing as well as raising cash through other stakeholders (Kaplan Zingales). For on to get hired they need good peo...