Login with Facebook

Factors about The Savings Investment Process

One of the most important moments in managing your savings is the investment decision in products / financial instruments. A reasoned and conscious decision-making process starts from the knowledge of one's own preferences in terms of risk, their skills and objectives, as part of a broader financial planning process.

 The data collected on the investment behavior of families reveal the limited skills of people in financial matters - both with respect to both understanding and decision-making models. These limitations are manifested primarily in the lack of awareness of the factors to be considered before investing i.e., objectives, time horizon, expectations, and financial skills to bear any losses. Only 24% of investors consider the time horizon important; just 18% of the targets; a very low percentage (15%) declares to take into account their own economic capacity to take risks. The characteristics of an adequate investment decision-making process are not known to about 40% of the sample investigated; about 60% of respondents do not know any of the investment services required by current legislation.

 Nonetheless, over half of the retail investors say they make choices by trusting the advice of family, friends, and relatives (i.e., using informal channels); only 25% use a consultant professional. The key elements that encourage participation in the financial markets are the ability to buy products with a minimum guaranteed capital and/or yield and trust in intermediaries. The factors that discourage participation in the financial markets are the lack of savings to invest (reported by 60% of investors), the fear of incurring capital losses, and exposure to market trends (20% and 15%, respectively).

The lack of knowledge and skills, therefore, reverberates in suboptimal investment choices (sometimes induced by proposals of financial intermediaries in the conflict of interest). Let's now look at the Factors to keep in mind about the savings-investment process.

The choice of the intermediary. 

The lack of skills of people does not advise a "do-it-yourself" approach to investment strongly. Selecting an intermediary who can provide assistance in the investment decision-making process and in monitoring the financial portfolio is a necessary operation, which requires time to acquire information on the services provided, on costs, on how to reporting, etc. A comparative analysis between multiple intermediaries is strongly registered mail. 

Before investing, the financial profile of the saver must be defined. 

This is an essential starting point for making a coherent and conscious choice of the financial risks they intend to bear. Intermediaries have an obligation to track the financial profile of each saver to whom they provide investment services. This presupposes an exchange information-information between customer and intermediary on the investment objectives of the customer himself, on his risk appetite, economic and financial situation, on the identified or desired time horizon of reference and other, that is, on all the elements that constitute the client's subjective "background."

The choice of the product / financial instrument in which to invest one's savings must be consistent with the financial profile of the saver.

On this point, it should be mentioned that it is not enough for a saver to acquire information on the characteristics of the investment product; a typical saver is not able to elaborate and understand them correctly. Often, the non-competent saver acts on the basis of suggestions (past returns, word of mouth, advice from friends and relatives, etc.), that is, based on emotional reactions. A classic example of the "psychological trap" in the investment decision phase financial is made up of the different impacts they can have on the saver different representations of the same information. This is called framing effect (literally, "classification"); the methods of presenting information (graphic format, emphasis on positive or negative aspects, etc.) can guide the perceptions of the reader's risk and influence their decisions. 

The lack of awareness in terms of personal needs, psychological attitudes, risks, opportunities, rules and technical instruments in economic and financial matters, is a harbinger of inducing the saver to be erroneous and harmful decisions or, for other reasons towards, to make him subject-weak in the relationship with incorrect intermediaries.

In an orderly way of making decisions, the saver must request prior information on the type of investment, on the characteristics of risk/return, on the immediate and expected periodic costs, on the conditions of liquidity of the financial product in the case of first divestment of any expiry, and on the existence of any contractual provision events or conditions that can "alter" the monetary value of the product itself. Exploratory questions to ask the intermediary can be the following:

• How much they make alternative investments potentially less risky, such as for example government bonds of the same maturity?

• What is the expected return on the product offered net of investment costs and tax withdrawal?

• It is possible to express expected returns and costs in monetary terms of the investment (for example: if I invest 100 dollars, how much I will have accrued between one year / 2 years / 5 years net of costs and tax levy?

 Much attention must be paid to investments in financial instruments complex, particularly difficult to understand with regard to the underlying risks, tools financial derivatives ABS, CDO-squared, perpetual bonds, so-called securities hybrids, structured bonds, certificates, etc.

The information presented in the information documents must be "critically" assessed or received by the intermediary and try to check if you have understood what you have read or heard. It is important to know that the intermediary acting as a consultant and/or manager whose duty to assess whether the financial product it proposes is suitable to the needs and characteristics of the saver who intends to invest. In other terms, it must assess its suitability for the profile of the saver. In the case of the recommended product, the saver must receive by the intermediary the representation of the reasons why the product is deemed adequate to the financial profile of the saver himself.

The importance of monitoring the investments made (portfolio financial). 

Over time, the characteristics of the chosen product may change (yes, think about the solidity of a bond issuer), and needs may change of the saver. The adjustment of the financial portfolio must proceed through an examination of all the other parameters considered above. In any case, it is good practice not to react in an automatic way to the short-term results of your investments. Also, in this case, "behavior traps" and "mental shortcuts" can lead to respond unreasonably to external stimuli. It is, therefore, necessary to reflect and ponder subsequent choices, possibly with the help of an expert. The investments made are an integral part of an overall financial plan, which is instrumental to the realization of our desires and objectives; for this reasonSavings Investment Process, the reading of the periodic reporting sent by the intermediary must be carefully examined.


Comments





Send Comment

Need a custom
essay?

We will write it for you.
Order now

Free Essay Examples

Free essays:

All you need to know about the epidemiology
Applications of BIOMEMS
All you need to know about metabolic pathways
Application to synthetic biology of CAD methods
Broadcasting: How to Be Good In Front of the Camera
Bioconjugates for the Drugs Delivery
Big data analysis in evolutionary biology
Brain-Computer Interface systems with EEG signals
Current challenges to the health of women
Current challenges to the health of Adolescence
Competitive strategies for modern businesses
Computed Tomography (CT) images and their reconstruction
Doppler ultrasound or simply eco Doppler
DNA extraction
Dynamic Systems Modeling with Machine Learning
Digital Imaging: What Is It?
Everything you need to know about the capital market
Entrepreneurship: Conceptual Framework for Evaluating Technology
Entrepreneurship: Opportunity and Design Thinking
Everything you need to know about enzymatic kinetics
Factors about The Savings Investment Process
Financial intermediaries and its Types
Fascias: all about fibrous membranes
Funding sources for non-profit organizations
Genetic regulation networks: modeling in biology
How to make your business survive at economic crisis
How to choose the topic of the senior capstone project
Healthcare technologies that help patients with better self-management
Introduction of Microfabrication techniques
Introduction to Writing a TV Script
Introduction to Journalism
Importance of modern trade policy
Journalism: What is News?
Journalism: Broadcast media and Television Presenters
Journalism: Sources of News
Journalism and Law
Kinetic models in biology and Related fields
Know about the different forms of traditional African dances
Know about the history of science
Latest technology trends
Microfluidics and microfluidic chips
Molecular Imaging
Modern conservatism in America
Modeling and simulation of genetic regulatory networks
Nanomedicines to target tumors
Nonlinear Dynamics in Biology & Biomedicine
NLS (Nonlinear System) - Revolutionary system in diagnostic medicine and therapy
Neural networks: what they are and what they are for
Overcoming Hiring Challenges for Nonprofit Organization
Principle of Optical coherence tomography (OCT)
Politics and Religion: Relations and Conflict Issues
Principle and parameters of Volumetric computed tomography
Role of technology in the modern business environment
Role of Homeostasis in Human Physiology
Role of a digital artist
Role of gender studies
Skills in Journalism: Effective Interview
Systems biology - An understanding the functioning of biological systems
Self-assembly for biological systems
School of American Ballet
The Structure of Interest Rates and the Yield Curve
The New Media: Emerging Trends
The technical basis of optical coherence imaging
The Principles of MRI Contrast agents
Ultrasound: physical principles and image formation
Understanding social entrepreneurship
Understand the importance of investigative journalism
Urban planning in the US
Various theoretical perspectives of sociology
Virtual reality, what it is and how it works
What is transition elastography?
What is lithotripsy and its types?
4 Facts about Origin of Mathematics!
5 techniques to create an animation
13 Best colleges for political science in the world
3d Model Of Building
All you need to know about the ACA Code of ethics
Architecture and Democracy: An Introduction
Architecture and Democracy: Democratic Values
Architecture and Democracy: Democratic Procedures
All You Need to Know About a Synthesis Essay
An essential guide to understanding Film Theory
Application of Artificial Intelligence in Cyber Security
Applications of electrical engineering
Augmented reality: what it is, how it works, examples
Advantages And Disadvantages Of Social Networking
All you need to know about Cryptography
Applications of astrophysical science
All you need to know about architecture engineering
Applications of geological engineering
Artificial intelligence and medicine: an increasingly close relationship
An insight into Computational Biology
ACA code of conduct
A Rose for Emily
Applications of Mathematics in daily life
Architecture mistakes to avoid
All you need to know about Toxicology
All you need to know about Holistic Medicine
All you need to know about linguistics
An introduction to Linguistics and its subfields
All you need to know about Anxiety disorder
All you need to know about Drones
A Brief Insight into Political Science
Assumptions related to feminism
All you need to know about Byzantine emperors
All you need to know about labour economics
An insight into xenobots -the first-ever robots
An ultimate guide about Biomaterials
A Comprehensive Introduction to the Mona Lisa
Analysis methods of Transport through biological membranes
An ultimate guide about biochemical reactions
Analysis of brain signals
Artificial Gene Synthesis
Application to synthetic biology of CAD methods
All you need to know about metabolic pathways
Applications of BIOMEMS
All you need to know about the epidemiology
How to Write a Personal Essay
Housing Needs in America
How to Write a Description Essay
How to Create an Excellent Scholarship Essay?
How to write a cause and effect essay
How to Hire the Best Essay Writing Service Provider?
How to Write a College Application Essay?
How to get the most out of your English lectures
How to write Expository Essay
How to succeed in your psychology class?
How to Write an Academic Essay in the Shortest Time?
History of Journalism
How Different Sectors are Using Artificial intelligence (AI)
How to write an informative essay
How to deliver persuasive essays?
How to Give a Convincing Presentation
How to write an essay on leadership?
Historical Art Still Around Today
Humanoid robot: what it is, how it works and price
History of Chemistry
Healthcare Advanced Computer Power: Robotics, Medical Imaging, and More
Healthcare AI: Game Changers for Medical Decision-Making and Remote Patient Monitoring
How to understand different types of English
How to Cope with Chronic Pain
How African American choreographers and dancers have influenced American dance
How mobile robot can do in logistics or in production
How To Become a Successful Entrepreneur
History of the Philosophy of Feminism
How is the climate changing?
How to Track Your Content Marketing ROI
How to Gun control In the USA?
Historical and contemporary role of labour in the modern world
How breast cancers are classified?
How the cells of our body communicate?
How the Lymphatic System Works?
How Digestive System Works
How to complete your capstone projects effectively?
How to write a research project
Healthcare technologies that help patients with better self-management
How to choose the topic of the senior capstone project
How to make your business survive at economic crisis
The Looming Energy Crisis in America
Top benefits of performance-based engineering
The More Languages You Know, The More Times You Are a Man
Things to consider while writing an Argumentative Essay
Top Ways to Improve Your Academic Writing Skills
Tips to Excel in Creative Writing
The origins of films in the early 19th century
Top career options in Architecture
The Elevator Pitch
Top finance trends 2020
The basic Structure and functionality of robots
The Way to Success
The election system of the President in the United States of America
Two-party System in United States of America
Top trends in urban design
The history and theory of African American filmmaking
Top benefits of creative writing
Tinnitus Guide: Common Symptoms and Treatment Options
The language of dance
The digital image processing management
Top famous politicians of the World
Top methods of political science!
The history of the feminist movement
The blood flow in cardiovascular system - Biofluid Mechanics
The best of Leonardo Da Vinci
The Structure and Function of Macromolecules
The structure of cell: a research on the bricks of the human body!
Tissue and organ construction: Adhesion and recognition between cells
The kinetics of the transformation processes
The Modeling of Biological Systems
Tips for writing a great thesis statement
The Defense mechanisms against infections
The impact of the technological innovations in medicine
Top journalism trends to know about
The relation between mass media & politics
Theranostics: Diagnosis and Care through Nanoparticles
The practical Applications of X-rays
The applications of Ultrasound in medicine
Transfer mechanisms of genetic information in Bacteria
The regulation of cellular metabolism in the diagnosis
The Principles of MRI Contrast agents
The technical basis of optical coherence imaging
The New Media: Emerging Trends
The Structure of Interest Rates and the Yield Curve
What is a Definition Essay?
What are diagnostic essays?
What is the relation between art structural engineering?
What is a Narrative Essay
What are robotics and intelligence systems?
What are the benefits of studying health sciences?
What is artificial intelligence and why it matters?
What is comparative Literature?
Why study neuroscience
What is Wi-Fi and how does it works
What is French history famous for?
What are Humanistic Studies?
What is covered in Biophysics?
What is modern journalism?
What is Virtualization? Benefits & Applications
What are modern public relations?
What is plasma physics?
What is teacher preparation?
What is rapid prototyping for 3D printing?
What is contemporary European Politics?
Why should you learn American Ballet?
What is engineering physics?
What is the purpose of African American Literature?
Ways to learn the Rhythm
What is digital art used for?
What are Enzymes and how do they work
Who is the father of political science?
Why Study Political Science - Job?
What is the Philosophy of Feminism?
What is a quantum computer?
Ways B2B Startups Streamline Their Conversion Strategies
Why do biomedical signals need processing?
What are the long term effects of climate change?
Why study labour relations
What is Holoprosencephaly?
What is antisocial disorder?
What are the important principles of evolution?
What is the cytoplasm and its function?
What is biopolymers?
What Makes a Good Leader
Women empowerment in modern generation
What is the history of political thought?
What is Gene recombination
What is synthetic biology
What is business cost analysis?
What is Inflation
What are the consequences of unemployment?
What is lithotripsy and its types?
What is transition elastography?