BUSFIN

• Finance


  The art and science of managing money
• Financial Management


  Running & supervising any business entity on the aspect of its valuable resources to achieve its objective
• Budgeting


  An act of estimating revenue and expenses over a period of time
• Investments


  Come in many forms that will generate income or appreciate in the future
• Sources of Funds


  • Personal savings
  • Loans
  • Family & friends
  • Credit cards
  • Investments
• Finance


  • Spending / Budgeting
  • Saving
  • Investing
  • Sourcing
• Personal Finance


  • Managing your own money
  • Saving, budgeting, and meeting personal goals
  • Investing, tax planning, education, and retirement plans
  • Takes into account the time value of money, the different financial risks, and other future life events
• Average Person’s Cycle (Brown & Reilly, 2014)

  • Accumulation Phase
  • Consolidation Phase
  • Spending Phase
  • Gifting Phase
• Basic Principles of Personal Finance

  • Knowledge
  • Make a plan
  • Time value of money
  • Taxes, expenses, and management fees
  • Ensure enough liquidity
  • Be smart and wise in spending matters and priorities
  • Protect yourself against major and natural catastrophes
  • Risk and return work together
  • Money and finances have a lot to do with your behavior and personality as well
• Financial Literacy


  The ability to manage your financial matters in an efficient, effective, and responsible manner
• Components of Financial Literacy

  • Knowledge about money, inflation, interest, value, prices, future plans, and protection for oneself, family, and loved ones
  • Part of knowing where you want to be financially literate: Target & Goal Setting
  • Living and maintaining your lifestyle
  • Ability to make sound financial choices for further gains and to be ready for any sudden, unexpected events
  • Financial literacy is about knowing how to do personal finance well
  • Knowing how to grow your wealth and money
  • Manage your credit
• Financial literacy


  • Target & Goal Setting
  • Living and maintaining your lifestyle
  • Ability to make sound financial choices for further gains and to be ready for any sudden, unexpected events
  • Knowing how to do personal finance well
  • Knowing how to grow your wealth and money
  • Manage your credit at all times
  • A skill to be used your whole life
  • If there is something you do not understand, always ask
  • Many high-salaried/high-income people still have low savings and are broke (ex: lotto winners)
• Financial Planning Process


  1. Objective Setting: Quantify monetary objectives with definite time frames (long-term/short-term), Prioritize objectives, Examine these objectives with an individual’s resources and limitations

  2. Data Gathering: Use surveys, questionnaires, and interviews to gather quantitative and qualitative information from the individual, Know their risk tolerances (conservative, moderate, aggressive)

  3. Data Analysis: Analyze the individual’s financial position and cash flows (assets & liabilities), Review legal papers, Evaluate objectives vis-a-vis the individual’s resources and economic conditions

  4. Financial Plan Recommendation: Propose financial products, At this point, the individual can comment on the proposed solutions

  5. Plan Implementation: Assist the individual in the execution of the recommended financial plan, Implementation may involve other entities to assist the individual in dealing with the parties involved in the execution of the financial plan

  6. Plan Monitoring: Review the financial plan periodically to evaluate changing market conditions, Evaluate the financial plan regularly to see if it effectively meets the individual’s goals and objectives
• Six Key Areas of Personal Financial Planning

  • Financial Position
  • Adequate Protection
  • Tax Planning
  • Investment and Accumulation Goals
  • Retirement Planning
  • Estate Planning
• LESSON 2: INVESTMENT
• 4 Simple Habits for Personal Finance Success

  • Save money
  • Avoid debt
  • Invest
  • Don’t lose it
• Investment


  • An asset acquired
• Estate taxes paid to the government are huge, so avoiding these taxes can significantly impact one’s personal finances
• 4 Simple Habits for Personal Finance Success

  • Save money
  • Avoid debt
  • Invest
  • Don’t lose it
• Investment


  An asset acquired with the goal of generating income or appreciation
• Investment in finance


  A monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for profit
• Wealth Managers help people in managing wealth
• Wealth Maximization


  • Increasing the value of the company by increasing the price and value of shares
  • Maximizing profit
  • Money can earn interest, but the buying power may be offset by the inflation rate
  • Interest Rate - Inflation Rate = Difference in Buying Power
• Inflation


  • Reduced purchasing power and value of money
  • Increase in the general prices of goods and services
• Causes of Inflation


  • Spending by consumers and the public
  • Market Confidence & Strength
  • When the aggregate demand goes up
  • Low Supply
  • External influence & factors
• Beating Inflation


  • Power of Compounding Interest
  • Investments
  • Diversification
  • Mutual Funds
  • Grow wealth & income at a faster and higher rate than inflation
  • Live within or below your means
  • Maintain a tight and reasonable budget
• Risk


  The chance that an investment’s actual return will be different than expected
• Risk Management


  • Risk Tolerance - the amount of risk that an investor (individual) is comfortable taking or the degree of uncertainty that an investor is able to handle
  • Risk Appetite - the level of risk that an organization (business) is prepared to accept in pursuit of its objectives before action is deemed necessary to reduce the risk
• Types of Risk


  • Systematic Risk & Undiversifiable Risk
  • Specific Risk, Diversifiable Risk & Residual Risk
  • Uncertainty inherent to the entire market
  • Uncertainty of the company
• Reducing or Removing Risk

  • Diversification - spread your investments to minimize risk
  • Portfolio - consists of all your financial assets
• Wealth Creation


  • Get rid of debt
  • Invest
  • Diversify
  • Grow your income
  • Spend wisely
  • Let money work for you
  • Seek advice from experts
  • Make a plan, a budget, and a target goal
  • Reduce living and lifestyle expenses
  • Create multiple revenue streams
• Wealth Creation


  • Get rid of debt
  • Invest
  • Diversify
  • Grow your income
  • Spend wisely
  • Let money work for you
  • Seek advice from experts
  • Make a plan, a budget, and a target goal
  • Reduce living and lifestyle expenses
  • Create multiple revenue streams
• Create multiple revenue streams


  Income from multiple sources increases your rewards of more time and more money
• Types of Investments


  • Oneself
  • Bank Deposit
  • Currencies
  • Stocks
  • Mutual Funds
  • Bonds
  • Treasury Bills
  • Real Estate
  • Cryptocurrencies
• Oneself


  1. Evaluate career demand

  2. Choose your career

  3. Equip yourself
• Bank Deposit


  1. Deposited money earns interest (usually 2%)

  2. Usually yields a negative value when the inflation rate is subtracted from the interest rate

  3. Interest Rate - Inflation Rate = Difference in Buying Power

  4. Role of Banks: Act as a broker to investment programs, insurance packages, and even to communicate to other banks. A way of transferring money to other parts of the world. Earn on interest, commissions, fees, charges, and money management. Give advice to clients and sell products to them
• Currencies


  Money earns by BUYING different money currencies at LOW prices and SELLING it back at a HIGH price. Buy Low, Sell High
• Stocks


  Stock - a representation of % ownership of the company. Stockholder - owners of stocks who are entitled to a proportion of the corporation’s assets and earnings. Types of Stocks: Common Stocks - Entitled to receive dividends. Variable dividend payments as to timing. Has voting rights. Has preemptive rights (maintain % of ownership). Preferred Stocks - Entitled to a higher rate of dividends. Fixed regular dividend payments. Has no voting rights. Gets paid before common stockholders
• Factors Affecting Share Prices

  1. Dividends

  2. News

  3. Speculations

  4. Investors

  5. Economy

  6. Neighbors

  7. Weather

  8. Management

  9. CEO

  10. Basic Demand & Supply
• Mutual Funds


  Your money earns interest on multiple mini shares of different companies. Fund managers are in charge of investing your money in other securities