Finance is a study which figures out how people, businesses and groups make and use money. It can mean:
- Thinking about money
- Thinking about how to control money to make profit
- Studying how to take chances in projects that make money
- As a verb, "to finance" is to make money for business.
Some simple finance ideas
The process of finance is learning how people and groups act in managing their money, and most of all how they manage making money, and making a profit, with spending money, or making a loss.
A group that makes more money than it spends can lend or invest the excess profit. On the other hand, a group that makes less money than it spends can raise money by getting a loan or selling stock, or spending less, or making more money.
A bank is where many people borrowing money meet people lending money. A bank gets money from lenders, and pays interest. The bank then lends this money to borrowers. Banks allow borrowers and lenders of different sizes to meet.
Corporate finance is about things like the sale of stock by a company to the public. Stock is ownership in a company, broken up into pieces. The stock gives whoever owns it part ownership in that company. If someone buys one share of XYZ Inc, and the company has 100 shares available, the buyer is 1/100th owner of that company and owns 1/100th (1%) of the profit.
Finance is used by people, by governments, by businesses, etc., as well as by all kinds of groups.
This is finance for people. It is about:
- How much money will be needed by a person, now and when they get old.
- Where will this money come from (e.g. savings or borrowing)?
- How can people protect themselves against problems with money in their lives?
- How can family money be given to children and grandchildren?
- How do taxes affect money choices?
Business finance is about finding money for a company's activities. It studies trying to make more profit than loss, and taking good risks for the chance to make more money.
Financial economics is the study of economics which is important to financial things like changes in price and supply of goods.
It studies how much risk some actions that a company may take will cause, and how the company should spend its money.
Warren Buffett is an American investor, business magnate, and philanthropist. He is considered by some to be one of the most successful investors in the world.
James Harris Simons American mathematician, hedge fund manager, and philanthropist. He is known as a quantitative investor and in 1982 founded Renaissance Technologies, a private hedge fund based in New York City.
Wall Street, the center of American finance.
London Stock Exchange, global center of finance.
Finance Facts for Kids. Kiddle Encyclopedia.