Financialinvestment is a course where we learn how to put money in an assetwith the hope that it will grow into large sums of money in thefuture. In financial investment, therefore, we learn how to plan forit, how to explore the possible investment plans existing in themarket, and also how to appoint to appoint the personnel who can beresponsible for taking care of the investment needs. The types offinancial investments include mutual funds, bonds, stock, equities,real estates, and fixed deposits. There’s need to learn aboutfinancial investment because this is the only way we can control ourspending pattern and also make our future secure (Murray and Goldie,2011).
Thiscourse will help me in my future position if I happen to work in afirm as a financial investment analyst. First, I will help thatcompany to do proper planning and careful analysis of the projects toinvest in so that the enterprise will get attractive returns in afuture period. Secondly, it will enable me to explore all theinvestment projects in the market and advise the company on the mostprofitable investment to invest in for the company to get maximumprofits. The best practices in investing may include first, having adiversified portfolio. This means that we should try to invest inmore than one economy or sector. Secondly, we should attempt tocreate a separate hobby portfolio indicating that some of theinvestments should be made in a very conservative and highly liquidinvestment. Lastly, solid fundamentals should be used when fillingthe portfolio meaning that we should use other methods to measure thevalue of the market other than depending on the price-to-earningsratio (Heartland Capital Strategies, 2016).
Derivativeshave gained popularity in the market due to the risks involved whendealing with the financial investment projects. Derivatives areimportant in this sense because they enable investors to get maximumreturns within a very short time unlike the stocks and bonds (Kolband Overdahl, 2010). The investor can gain maximally if time is takento understand the risks involved in a derivative and make properinvestment plans.
Thepopularity of the derivatives is not certain in future following therecent problems with speculations, risk management techniques, andthe government.This is because the future speculative prices onwhich derivative securities are sold is highly depended on the pricesof the underlying assets and speculators could gain or lose dependingon the options that the underlying assets could be sold at thatfuture date. Following the inefficiencies associated with creditrisk, I recommend enhanced cooperation between the market players andgovernment authorities to address the problems of credit derivatives.
Followingthe current trends and best practices in financial investment, I seeradical changes going to take place in bonds and stocks. This isbecause the two are the most affected by the financial derivatives,and I expect tremendous changes in the derivatives. In stocks, thecall options upon which stocks are traded is likely to change therebyaffecting the current options. Bonds are affected by the swaps, andbetter methods of exchange upon which investors will be benefitingare likely to emerge following the inefficiencies in the investmentmarket.
Tostay at the top of the topics in this course, I will try to monitorthe investment market and the derivatives so that I will learn of thenew practices that may arise to solve the current inaccuracies.Similarly, I will put the topics studied in application in thefinancial market from time to time so that I will put what I havelearned in class in the application.
HeartlandCapital Strategies. (2016). Bestand Worst Investment Practices – Best Practicesretrieved fromhttp://www.heartlandnetwork.org/publications/best-and-worst-investment-practices?showall=&start=1on March 16, 2016.
Kolb,R. W., & Overdahl, J. A. (2010). FinancialDerivatives: Pricing and Risk Management.Hoboken, N.J: Wiley.
Murray,G & Goldie, D. (2011). TheInvestment Answer: Learn to Manage your Money and Protect yourFinancial Future.Little, Brown Book Group.