Financial Products
Financial Products simply mean the tools that help you invest, save or get insured. Financial Products are issued by various financial institutions, banks, government sponsored enterprises, insurance companies and stock brokerages. These products are classified on the basis of the type, risk associated, return, asset class and volatility.
Different types of Financial Products provide different types of conveniences. Having a bank account for managing your money can make your everyday life extremely convenient. Having an insurance policy can provide you with financial coverage against any sort of mishap. Investing in good products like shares, bonds and so on, can help your money grow.
It is essential to understand the characteristics, advantages, limitations, cost and potential risks of the Financial Products before investing in them. Given below are the broad categories of Financial Products. These include: Bank Accounts, Insurance, Credits and Loans and Investments. Let us now put some light on these products.
1. Bank Account
Bank Account is a way of managing your money. Bank Accounts help you keep a track of your savings and what your expenses are. Your salary is added directly to your account these days. You can also make payments, pay bills and receive cash through your Bank Account. All these transactions can be made by visiting the bank branch or the networked branch or using the bank’s ATM or simply through mobile banking facilities provided by most banks today.
2. Insurance
Insurance policies are designed to provide financial coverage or protection to the insured against a variety of unfortunate events which lead to the loss of lives and assets. For instance, life insurance, car insurance, house insurance and so on.
3. Investments
The habit of saving is always encouraged. But saving isn’t enough. You can not be financially secure just by owing large amount of money. Being financially secure involves the investing your money in the best possible way, so that it can grow. It becomes easier to meet your financial desires if you learn to invest in the right way at the right time. It is always better to start as early as possible but it’s never too late to start!
Once you have set aside your savings and got the best insurance policies that you need, you should probably think about investing your money. You should always consider how much you can afford to risk and invest. It is essential to be familiar with the types of investments so that your investments can help you diversify your portfolio. It does not matter if you do not have large sum of money to be set aside as investments, you can always start small. All types of investments come with risks. It is always advisable to invest in varied products so as to reduce the overall risk.
4. Credit and Loans
The amount you borrow or owe to someone is called a debt. Different types of borrowing include loans, credit card dues, overdrafts and so on. Most banks and financial institutions offer various sorts of loans to its customers. They also offer debt advice and solutions. The lending institutions include payday loan companies, brokerages, credit card issuers, peer to peer lenders and other collection firms. Before taking a loan, you should always consider your repaying ability.
Financial Products are designed to make your money-life easier but the risks involved can not be ignored. So research well before you invest your hard earned money!
