Financial Services

Financial services encompass a broad spectrum of businesses that handle people’s money and investments, from credit cards to banking and everything in between. You are most likely to use some form of financial service at least once in your life, and it is useful (and often profitable) to have a good understanding of the sector.

The most well-known aspect of financial services is banking, which includes depositing cash into checking and savings accounts as well as lending it out. Typically, about 10% of the money deposited into a bank must stay on hand as reserve, and the rest is available for loans, which earns interest for the banks. This branch of financial services also includes providing investment funds to customers, which they then use to invest in stocks, bonds, mutual funds and other securities.

Another important aspect of financial services is insurance, which provides protection against risk. This protects people against the risk of death or injury (e.g. life, disability and health insurance), against property loss or damage (e.g. homeowners or car insurance) and against liability or lawsuit (e.g. liability insurance).

In addition, this sector involves a large number of professional financial advising services. These include providing due diligence on investments, M&A counseling, valuation services, and real estate consulting for both individuals and businesses. It also consists of firms that provide global payment services, such as Master Card and Visa, and those that facilitate stock, commodity and derivatives trading.

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