What Are Financial Institution?Government agency or privately owned entity that collects funds from the public, and from other institutions, and invests those funds in financial assets, such as loans, securities, bank deposits, and income generating property.
Role Of Financial Institution• Financial institutions provide service as intermediaries of financial markets. They are responsible for transferring funds from investors to companies in need of those funds. Financial institutions facilitate the flow of money through the economy
Credit UnionDefinition: – A credit union is a corporative financial institution, owned and controlled by the members who uses its services. – Credit union serves groups that share a common bond – Credit unions are not-for-profit organizations.
Credit UnionRole: – Provides a safe and convenient place for members to save money and get loans and other financial services at reasonable rates.
Credit UnionOwnership: – Each member of the credit union is an equal owner, entitled to one vote at the annual meeting. – Credit unions are led by the board of directors elected in the annual meeting.
Mutual FundsDefinition: – A mutual fund is a mediator that brings together a group of people and invests their money in stocks, bonds and other securities. – Each investor owns shares, which represent a portion of the holdings of the fund. Thus, a mutual fund is one of the most viable investment options for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Mutual Funds Does investing in mutual funds mean investing in equities only? – Mutual Funds, besides equities, can also invest in debt instruments such as bonds, debentures, commercial paper and government securities.
Pension FundsDefinition: – A fund established by an employer to facilitate and organize the investment of employees retirement funds. The pension fund is a common asset pool meant to provide income (pensions) for employees when they reach the end of their working years and commence retirement .
Hedge FundsDefinition: – Hedge fund is similar to mutual fund but a mutual fund is registered with the SEC, and can be sold to an unlimited number of investors. – Most hedge funds are not registered and can only be sold to carefully defined sophisticated investors.
Life Insurance FundsDefinition: – A life insurance policy is a valued insurance policy that pays a specified amount to the beneficiary, when the insured dies. – A beneficiary can be a person, business, trust, or estate. – The owner of the policy is the person or organization who pays the premiums and has ownership rights. – After the death of the insured, the face amount of the policy is paid to the named beneficiary.
Life Insurance Funds – Premature death is, for insurance purposes, the unexpected death of someone who provides financial support to others, and life insurance helps to provide that support.
Life Insurance FundsWhat does insurance pays for?
Life Insurance FundsHow does life insurance works?