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Finance, Credit, Investments – Economical Categories

We all know that economics is the study of consumption, production, and distribution of goods and services. It is all theoretical. It includes the thinking and planning of any economic idea. One can use economics in planning how to manage money and business production. With this concept, economics is divided into some categories. These prominent categories are finance, credit, and investment. Let discuss these categories and their use in marketing.

Finance

Finance is the field related to the activities of assets & liabilities allocation, leverage or debt, banking, credit, and investment. These activities are performed under some conditions of uncertainty and risks. The main objective of financial market agents is to manage the price assets, ultimate value, and return rate of investment. Finance has three main categories which are the following:

  • Personal Finance

Meeting one’s personal goals is called personal finance. It includes short term financial needs, retirement planning, and savings for different purposes, such as savings for a child’s education.

  • Public Finance

Public finance is related to the finance of sovereign states and country subdivision. It includes a long term strategy and plan of investment decisions.

  • Corporate Finance

Corporate Finance includes funding sources and assets of a corporation. Moreover, managers of the market increase the value of specific firms, which is then used for financial resources.

Many people confuse economics with finance. Some people think of them as same. But there is a difference between both of them. Economics is a logical process of decision making, and finance is the execution of that decision.

Credit

Credit is a pledged agreement that allows one party to give resources (e.g., money, goods) to another party. In this situation, the receiving party does not compensate immediately for providing the party. But the second party can either promise to repay or return the resources (or other things with equivalent worth) some additional time. In simple words, credit is the way of official trading done legally with a group of distinct people.

In the present day, an enormous amount of credit is provided by banks. Bank issues credit in two parts. One is in the form of money (credit), and the other is in the way of its debt. There are two types of credit you can get. These types are as follows:

  • Consumer Credit

Goods or services offered to a person for not providing instant payment is called consumer credit.

  • Trade Credit

Trade credit generally states the approval of late reimburse for purchased goods and services. Many corporations offer trade credit to their clients as part of their agreement to those who financially unstable.

Investments

Investing means to allot money for something (e.g., property) expecting some profit in the future. The benefit that one gains from an investment is called return rate. This return rate can be a profit or loss that comes from the sale of something like property. The change in foreign currency can also affect the return rate.

In the market, investors expect a generous return rate from their investments. To gain a high rate of return, they invest in riskier chances. Moreover, they adopt a good strategy and create a diversified portfolio.

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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