Money management
From Wikipedia, the free encyclopedia
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 among others for gambling and for stock trading as well.
Money management can mean gaining greater control over outgoings and incomings, both in personal and business perspective. Greater money management can be achieved by establishing budgets and analysing costs and income etc.
[edit] See also
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 answers to 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.Warren Buffet,in one of his documentaries,admonished prospective investors to embrace his highly-esteemed "frugality" ideology.This is the basis of every sound money management formulas.The following are powerful techniques that can be employed in making every expense made to be worth it: 1.cutting your budget on social needs 2.avoid any snob-appealing expense 3.always go for the most cost-efective 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.
[edit] References
Harris, Michael (May 2002). "Facing the facts of risk and money management" (PDF). Trading Strategies (Active trader): pp. 33. http://www.activetradermag.com/pdf/May2002.pdf. Retrieved 2006-11-19.
[edit] Further reading
Balsara, Nauzer J. (1992). Money Management Strategies for Futures Traders. Wiley Finance. ISBN 0-471-52215-5. http://books.google.co.uk/books?vid=ISBN0471522155&id=HmheSnf8xrUC&pg=PA1&lpg=PA1&dq=%22Money+Management%22&sig=FT8X3-O-qJ_-5DtBRWn-g6NbHvE. Retrieved 2006-10-29.
 |
This economics or finance-related article is a stub. You can help Wikipedia by expanding it. |
