Money Management

Topics: Investment, Risk, Decision theory Pages: 2 (603 words) Published: February 22, 2013
Money management
From Wikipedia, the free encyclopedia
For the magazine, see Money Management. For the professional management of investment funds, see Asset management. Money management the process of managing money which includes investment, budgeting, banking and taxes. It is also called investment management. Money management is a strategic technique employed at making money yield the highest of interest-yielding value for any amount of it spent. Spending money to provide all cravings (regardless of whether they are justifiable or not to be included in budget basket) is a natural human phenomenon. The idea of money management techniques is developed to plummet the amount individual, firm and institutions spends on items that add no significant value to its living standard, long-term portfolios and asset-basins,not spend it on prostitutes. Warren Buffett, in one of his documentaries, admonished prospective investors to embrace his highly-esteemed "frugality" ideology. This is the making every expense made to be worth it: 1. avoid any snob-appealing expense

3. always go for the most cost-effective alternative (establishing small quality-variance bench-mark, if any) 4. increase expenses more on interest bearing item than any other thing 5. establish the expected benefits of every desired expense using the canon of plus/minus/nil to standard of living value system. These techniques are investment-boosting and portfolio-multiplying. Contents

1 Trading & Investment
2 Ethical principles
3 See also
4 References
5 Further reading
6 External links

[edit]Trading & Investment
Money management is used in Investment management and deals with the question of how much risk a decision maker should take in situations where uncertainty is present. More precisely what percentage or what part of the decision maker's wealth should be put into risk in order to maximize the decision maker's utility function. Money management gives practical advice...
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