By Andrews D. Agblobi
The aim of this lecture is to understand some of the important concepts surrounding investment and retirement planning. It is not meant to discuss specific product type. Most investment products are designed around some of these concepts we will discuss today.
Nevertheless, we will emphasis on pension products when we touch on retirement planning.
Finance can be categorized into three broad areas:
1. Public Finance – relates to government or the state
2. Corporate Finance - emphasizes on firms or companies
3. Personal Finance – focus on household or individual livelihood.
Much of what we have been thought in our colleges and the universities has focused on the first two branches of finance. However, the most critical of these 3 to me is the third branch, Personal Finance that has long been placed at the “back-burner.”
The causes of the recent global credit crunch have its roots from the lack of sufficient understanding of this aspect of finance that affect household well-being. For instance, individuals borrowed more than they can afford to repay. Middle-income earners purchase expensive properties that are meant for the upper income brackets. Many individual took this risk with the idea that property prices will keep rising so they could cash in.
Any financial decision that affect the household or the family, would by extension affect he nation or the world. Let me quote, President Obama who once asked the students in France when he visited them in 2009, whether any of them would think that someone inability to service his mortgage in California, USA, will affect the people of France, in Europe?
Personal finance is all aspect of finance that affects household livelihood. Some of the financial products are life insurance, pensions, savings and investment. Others are real estate, starting a business or part owning a business.... [continues]
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