Features of finance will help you to determine your financial goals. An importance and sources of funds will help you to meet your goals. It is ultimate reality that finance is a basic component of any economy. Financial area and financial markets play out the fundamental capacity of diverting funds from individuals who have spared surplus funds to the individuals who are in need of financing or have lack of funds.
Features of Finance:
The goal of any business is to expand and make money for the shareholders, which is estimated by the stock price of an organization. What are the ways you can fulfill your financial goals. Here are some of the important features of finance present for your understanding.
1. Investment Opportunities:
A key feature of finance is to look forward for investment opportunities. Finance is required to invest your money to create wealth or earn profits from it. There are many investment opportunities in the market like purchasing a land, buying a home, investing in your business idea, buying stocks, shares or financial instruments. Through these investment opportunities you can generate wealth. Also remember that expected return on investment always keeps on changing depending upon economic factors.
2. Allocation and Utilization of Funds:
An important features of finance to every company is that, A business must guarantee that satisfactory funds are accessible from the available sources at the correct time. It needs to choose the method, strategies and types of finance to raising the capital, regardless of whether it is to be through the issue of securities or bank loan. When funds are raised, next step is to allocate those funds to different ventures, projects, etc. Mainly target of the any business is to maximize profits and earnings. Appropriate use of finance depends on investment strategies, techniques, decisions, control and management rules and policies for efficient results.
3. Diversify your Investment:
Best way to reducing the risk and maximize your profits / earnings of investment is to diversify your investment. A best features of finance is to diversify your investing funds and you may require additional finance for your diversification needs. Many experts have suggested that allocating all your funds from different sources into one area increases your risk on investment. You should diversify your investment for example: 20% allocation in equity funds, 20% allocation in mutual funds and 60% allocation in property or assets.
4. Financial Decision Making:
Decision making is one the primary features of finance. If you are really a good financial planner and you can analyse it well but you are unable to take decision makes no sense. Firstly, you should prepare your financial plans, secondly your finance management plans and then at the right time frame you should take decision. Slowing with the help of knowledge you will keep on improving your decision making skills which will benefit you in getting good returns on investment.
5. Financial Management:
Maximization of valuation of an organization is one of the features of finance which is a goal of the company. Thus, the goals of finance are to guarantee adequate finance and supply of funds is available to the business at any given time and also at a reasonable interest rate. Finance helps business by effective use of capital and resources to follow the rules of liquidity, productivity and limiting risk. It gives a clear picture of internal management, investment, planning and control decisions.
To grab the available profitable opportunities is one of the main features of finance to accomplish that goal. Do leave your feedback in the comments section, so that we can serve our reader with much better always.
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» e-Learning Chapter 1: What is Finance with Examples?
» e-Learning Chapter 2: What is International Finance?
» e-Learning Chapter 3: Importance of Finance
» Currently Reading: Features of Finance
» e-Learning Chapter 5: Source of Funds
» e-Learning Chapter 6: Types of Capital
» e-Learning Chapter 7: Types of Capital Market
» e-Learning Chapter 8: Types of Investment
» e-Learning Chapter 9: Short Term Sources of Finance
» e-Learning Chapter 10: Long Term Sources of Finance
» e-Learning Chapter 11: Finance Quiz – Finance Basics for Beginners