Investing in My Personal Financial Plan
Investing in My Personal Financial Plan
Investment is a very important aspect that an individual should consider in everything he or she does. Proper investment entails a better amount of returns in future. This implies that proper research about investing should be upheld. Before investing in a particular company, an individual should fcarry out an extended study of the chosen firm in order to see its performance. An individual should ensure that he understands the healthy nature of the company. This is in terms of the return rate and companys performance. The investor should ensure that he understands the fluctuation capability of the shares prices offered by the company. This means that the better performance is, the higher the achieved returns are. The study about the prices of shares and stock should not be scanty since investments must be achieved after a certain period of time(Gitman & Joehnk, 1999).
The saving aspect is vital in the life of each individual because proper savings guarantee an individual better life as well as better assets. Personal savings aspect makes life better and ensures a good retirement. Many analysts state that this process continues throughout the life of every individual. The analysts also claim that less educated people fail to save proper amount of money, thus do not enjoy a bette r retirement time. This is also said to happen if a downturn in the economy arises. This means that the amount of money saved, which could help maintain appropriate living standard after retirement, will be less than it is expected. Many analysts state that people should consider their finances while investing in business. This means that they should handle their finances as though they handle their business. This implies that each person should have a plan which determines success of their personal saving. The other aspect that they state is that each individual should come up with a budget that constitutes the expenses and income. This makes it possible for an individual to know the finances that he is left with. This means that the money left should be properly distributed in order to know which amount to save and which to use in other areas (Gitman & Joehnk, 2005).
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Investing in the profits achieved is an essential aspect. Investing is one of the ways used by many businesses to double up their profits. This means that each individual should try to invest in order to enjoy better finances which will lead to better savings guarantying better life after the retirement. Therefore, the more savings are made, the higher standards of life are. Consequently, the family will no longer have to worry about simple expenses. This means that even with the recessions which may occur, an individual will be secured from possible financial issues. Personal saving foundations are established to assist people in accumulating money. These foundations make it possible for the employees to receive proper education on how to save money without any fee inducted. This means that these foundations aim at enabling people to make effective savings for better and secure future (Hallman & Rosenbloom, 2003).
Capital is vital for every company. Many companies are inclined to sell stock so that to increase their levels of capital. This is the case with preferred stock which is sold as a measure to help raise the level of capital of a company with limitations not to increase the common stock. Companies usually prefer this stock to the common share. Common stock is a stock that entails companys share. Both of these stocks guarantee a shareholding prospect in the company. The greater difference between the two is that the people who hold common stock expect dividends at the end of each financial year. This is not the case with many companies as they do not offer dividends. Preferred stock, on the other hand, is preferred by many investors as it holds a lesser risk in comparison to common stock. Preferred stock is also advantageous because they guarantee a reward at the end of a time period. The other characteristic of preferred stock is that in case a company is pronounced bankrupt, then they have a higher advantage of obtaining the assets of the company before the common stock holders. The other difference that exists between these two stocks is the voting right. Those who hold common stock have a right to vote as compared to those who have preferred stock. Preferred stock holders do enjoy a dividend that is the same as compared to common stock holders whose dividend may fluctuate every year (Quamut, 2010).
The ratios portrayed by a company indicate its performance. These ratios help the company to plan its future performance. The working capital indicates the companys capital and the way it can be used. This implies that management can plan better performance based on the portrayed ratios. These ratios also indicate the rate at which the business can achieve its goals in a short- or long-term perspective. The quick companys ratios indicate that they can recover their investments within a short period of time. The EPS is one of the ways which indicates how profitable a company is. This means that this money is distributed to all common shareholders. This ratio makes it possible to identify companies which earn very rapidly and efficiently. The growth portrayed by this ratio shows the level of companys performance. This ratio is also used as a means of determining the amount of finances raised by a corporation (Libby, Libby & Short, 2011).
Strategic management involves the initiatives analysis set by the management regarding the resources put forward and companys performance externally and internally. This entails the organization overlooking the set missions, visions and objectives. This is characterized by the programs and projects that the company has set and wishes to achieve after a certain period of time. These programs and projects are used as a pathway for achieving companys goals and objectives. A scorecard is the object that is used for checking companys success and performance. Many managers state that objectives should be based on what the stakeholders expect. Strategies are plans set by the business for achieving better product design and quality as well as better promotion, distribution and pricing. This strategy should include the time span and goals of the business. The business should also consider targeting, segmenting and positioning of all its strategies. The reasons that companies and people employ short-term and long-term strategies are to ensure that they achieve their goals. These goals could help enable the company move forward or even get finances that will help alleviate debts incurred by the company. Some of the reasons include using available opportunities, competition and the succession of leadership (Chapman, 2005).
Investment is a very important aspect that should be considered by every individual. Thus people should have full knowledge about how shares pricing and sales are conducted. This also implies that individuals should aspire to help change and get involved in the companies decision-making process. People should also understand the importance of investing in shares. Proper financial planning should be a gateway to secure and worthy life after retirement. People should realize the importance of financial planning and the government should ensure a massive education program to emphasize this trait.