Financial Investment Management

Financial Investment Management

What is Financial Investment Management?

Financial investment is a process by which funds are invested towards purchase of financial instruments like securities, real estate, bonds and currencies. A term closely related to economics and financial disciplines, investment refers to ‘savings’ used for acquisition of assets or making bank deposits towards future income, instead of consuming them today. Financial Investment Management is the process of managing money invested in assets and securities. Financial Investment Management involves the redirection of funds towards high-gain potential financial instruments through carefully designed investment plans.

Types of Financial Investments and Exchanges 

Financial investments can be made on the following major types of


Shares are issued by large corporations as means to acquiring finance for their business needs. Highly profitable and risky, shares allow their owners (shareholders) part ownership of a company. Shares are purchased and sold by individuals in the financial (share) market. Returns on investments are provided to shareholders either as dividends or as profits gained after selling shares in the stock market. The term stocks, securities and equities are often used interchangeably with shares. Professional Financial Investment Management services offer expert advice on the economic market, the rise and fall of share percentages, profits, buying and selling of shares, etc.


 Bonds, like shares, are issued by large corporations for the purpose of acquiring finance to serve their business operations. Bonds are also issued by Government bodies to fund their expenses. Low in risk due to fixed interest rates, the principal is recovered at the time of maturity of bonds.

Treasury Bills: 

Issued by the Government at discounted rates on the actual face value, treasury bills are used for financing of short-term needs of the Government. Investors profit from the price differences between the face value and money earned at maturity, and the price at which treasury bills were issued.


Options provide an individual the right to buy and sell shares, without requiring him/her to actually buy shares. 
Mutual Funds: Mutual funds are financial instruments that encourage investors to invest in diverse financial products like shares, bonds, securities, etc. Because of the diversification of investment, mutual funds expose investors to less risk and high profits. Mutual fund investments require extreme market research, a good investment plan, and efficient management of funds. A highly specialised field of financial investment, mutual funds requires strong Financial Investment Management strategies.


Annuities are contracts between insurance companies and investors. Investors pledge financial protection to insurance companies in exchange for periodic payments.

Certificate of Deposit:

 These are issued by credit unions, banks or financial institutions. Certificate of Deposits have fixed interest rates and last over a fixed term.

Credit Default Swaps (CDS): 

These are complex investment schemes that demand active and experienced Financial Investment Management. Swaps require two parties to privately negotiate highly leveraged contracts. Swaps insure against losses incurred from investments on securities.

Collateralized Debt Obligations (CDO):

 CDOs are securities resulting from collateralization of debt obligations like loans and bonds. A CDO holder gains rights to a part of the debt pool’s principal and interest income.

Financial Investment Management and Exchanges

Financial markets are often referred to as Exchanges. Exchanges are where financial products are traded under the guidance regulating agencies. Exchanges operate under their own rules and practices fair transaction procedures towards all investors. The different types of exchanges are:

  • Stock Market – The stock or equities market trade in stocks, preferred stock, common stock, registered share, and voting share.
  • Bond Market – The bond market trades in fixed orporate bond, government bond, municipal bond, bond valuation, and high-yield debt.
  • Forex Market – The forex or foreign exchange market trades in currency, currency futures, non-deliverable forward, forex swap, currency swap, and foreign exchange options.
  • Derivatives Market – The derivatives market trades in credit derivative, hybrid security, options, futures, forwards and swaps.

The other types of exchanges are:

  • Money Market
  • Commodity Market
  • OTC Market
  • Spot Market
  • Real Estate Market

Since investment opportunities are many, there are varied levels of rewards and risks involved. The success of Financial Investment Management will be determined by the effectiveness of investing plans. Financial Investment Management demands the use of various analytical and technical tools to manage investment portfolios. Investors should seek the advice of professional investment managers and financial advisors to fulfill their financial objectives.

Financial Advice and Areas of Financial Investment Management

Financial advice plays an important role in Financial Investment Management. A Financial Investment Management advisor offers advice on asset investment and fund management. Financial advisors draw investment plans and structure investments. They recommend financial products for purchase and sale, and supply references. Good Financial Investment Management advisors should be qualified and possess sound understanding of an investor’s risk capacity to suggest suitable financial investment areas.

Before making an investment, investors should seek financial advice on:

  • Financial goal identification and setting priorities for goal achievement.
  • Budgeting and controlling expenses
  • Investment basics, generation of returns on investments in financial products.
  • Purchase of assets
  • Management of investment portfolios and assets, etc.

Hiring professional and competent Financial Investment Management services can help investors in the following areas:


Similar to insurance, annuities require investments at regular intervals to make payments weekly, monthly, quarterly, or yearly. Once annuities are traded, an investor cannot make changes in financial transactions. The service of a good Financial Investment Management advisor is a boon in such investments.

Endowment Policies: 

Similar to insurance and usually requiring ten to twenty years for maturity, endowment policies pay a good amount after maturity or following death of investor before the maturity. Investors can also withdraw money in case of critical illness. Selling an endowment policy is a complex process, and calls for responsible Financial Investment Management.

Tax Planning: 

Financial Investment Management advisors help clients arrange their financial affairs, increase deductions, reduce taxes and benefit from tax credits.


 Mortgages involve complex documentation and financial transactions and includes a number of loan options. As one of the biggest investments made by an individual, mortgages require the attention of able Financial Investment Management advisors.


Financial advisors help choose pension plans offered by employers, Governments, insurance companies or trade unions. Pension plans help secure future after retirement. Financial Investment Management forms a vital part of pension planning.