A Handbook for Personal Financial Management
Mao, Rubing (2017)
Laurea-ammattikorkeakoulu
2017
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201701091180
https://urn.fi/URN:NBN:fi:amk-201701091180
Tiivistelmä
The aim of the thesis is to introduce the concept of personal financial management and to explain the most common financial instruments. The study is motivated by three questions: (1) what is persona finance and how to management personal finance? (2) what are the common personal finance investment tools? (3) how to practice the tangible investment-real estate? The majority personal finance literatures are writing about English speaking market. Very few English version can be found discussing about Finnish financial market. Therefore, the study of this thesis can advance the understand of Finnish financial market for personal finance. To answer the proposing questions, a serial of literature studies has been conducted, as well as mysterious customer visit in local financial institutions. The data used in the paper is from books, and online sources of authorities and national institutes.
The findings from the study are that individuals should learn how to practice personal financial management. They are ought to build up a health financial habit, for instance saving as early as possible for better financial achievements. During the personal financial management, individuals should always have goals both for long term and short term, and monitor their own performance, then adjust the plan for the financial management. Besides saving, individuals should also learn how to invest their asset in the financial market to build steady growth in wealth. To avoid risk, investors need to create a diversified portfolio, which means investors should run various financial instruments and invest in different industries. Besides the application of diversification, investors can also utilize the concept of hedging to reduce the risks. There is a wide range of financial investment tools. Each tool has its own characteristics and level of risks. High risk does not imply that a certain financial instrument is a bad tool. On the other hand, higher risk usually comes with a higher return on investment. The investment tool choice depends on investor’s own preference. Investors need to allocate their assets in term of their tolerance of loss. In addition to the financial investment, there is another type of investment that is popular among investors-real estate. The real estate is usually the defense tool of financial investment. It keeps its value very well against inflation, and brings stable growth to investors. However, individuals need to be rational in real estate investment for the negative factors, such as unfavorable liquidity, and it takes long time before return on investment.
The outcome of the thesis offers insight into personal financial management. It enlightens people’s financial intelligence of running their personal assets. Investors can grasp some basic concept of personal financial planning. This paper is only a beginner guideline of personal financial management; it does not guarantee any return on investment. It takes time and capitals risk to practice and enhance the financial knowledge. It’s a long-term process, but the result can be rewarding.
The findings from the study are that individuals should learn how to practice personal financial management. They are ought to build up a health financial habit, for instance saving as early as possible for better financial achievements. During the personal financial management, individuals should always have goals both for long term and short term, and monitor their own performance, then adjust the plan for the financial management. Besides saving, individuals should also learn how to invest their asset in the financial market to build steady growth in wealth. To avoid risk, investors need to create a diversified portfolio, which means investors should run various financial instruments and invest in different industries. Besides the application of diversification, investors can also utilize the concept of hedging to reduce the risks. There is a wide range of financial investment tools. Each tool has its own characteristics and level of risks. High risk does not imply that a certain financial instrument is a bad tool. On the other hand, higher risk usually comes with a higher return on investment. The investment tool choice depends on investor’s own preference. Investors need to allocate their assets in term of their tolerance of loss. In addition to the financial investment, there is another type of investment that is popular among investors-real estate. The real estate is usually the defense tool of financial investment. It keeps its value very well against inflation, and brings stable growth to investors. However, individuals need to be rational in real estate investment for the negative factors, such as unfavorable liquidity, and it takes long time before return on investment.
The outcome of the thesis offers insight into personal financial management. It enlightens people’s financial intelligence of running their personal assets. Investors can grasp some basic concept of personal financial planning. This paper is only a beginner guideline of personal financial management; it does not guarantee any return on investment. It takes time and capitals risk to practice and enhance the financial knowledge. It’s a long-term process, but the result can be rewarding.