According to the requirement to write a - Essay Example

Personal Financial Structure The following table reflects my financial structure: Assets Non-financial assets Apartment - $ 3,00,500 Honda Accord Sedan Car - $ 21,779 Jewelry - $ 45,000 Non-money financial assets Nil Money M1 Bank deposits - $ 65,000 Cash in hand - $ 10,000 M2 Fixed deposits - $ 4,00,000 Mutual funds- valuation worth $1, 28,000 (based on present NAV) Income Earnings Annual Salary of $ 1,00,000 Expenditure Transfer payments Nil as on date What financial institutions do you employ?

I keep my savings in HSBC Bank (The Hongkong and Shanghai Banking Corporation Limited) New York City Branch. The main reason behind using this bank is the quality of the service given by the staff members of this branch. All of them are very amicable and helpful. The basic banking operations like cash withdrawal or deposits, taking help in other financial activities like getting car loan to purchase my car, using the locker facilities, opening FD, transferring fund- all can be availed in one place.. Apart from using HSBC for all my banking transactions, I also use the services of ‘The Fidelity Investments’ for trading and other financial issues.

As an individual I have some equity shares and for trading purpose I use the brokerage firm ‘Fidelity Investments’. The firm is extremely helpful in giving proper guidance in terms of choosing share units as well as mutual fund for my trade related investments. The brokerage charges and transaction fees are also very reasonable so overall making transaction through this organization is a helpful one. The customer service is extremely good, and its research tools help me to make comparisons of four stocks at a time using up to 147 different traits.

For myself and my family members, I preferred Allied Insurance. The premium of this organization is very reasonable and the process associated with payments is also very easy one. My car is insured with American Automobile Association for its lucrative premium. Discuss your own Demand for Money. What is the price of money? Have you ever considered this price before? According to the British economist John Maynard Keynes, the demand for money can be studied both from transaction and asset approach.

The demand for money which is also termed as liquidity preference theory is being classified based of three distinct motives of any individuals; these are- a transactions motive, a precautionary motive, and a speculative motive (Serletis, 94). Hülsmann (2009) in his report has mentioned that “The demand for money can be defined either as the demand for monetary payments (flow), or as the demand for cash balances (stock)”. (Hülsmann) It has been a proven fact that increase of price is a systematic process.

In his opinion, price can be discussed as the whole collection of goods and services that can be replaced for one unit of money. In other words, “the price of money is the buying power of a money part. (Hülsmann; Starr, 45) For personal and family expenses I used to set aside near about 40% of my monthly salary to fulfill my regular family requirements such as food, clothes, water, entertainment, shopping, electricity and other bills and charges like phone bills, internet and other miscellaneous charges.

In terms of emergency, I used to set aside 25% of my monthly salary in my savings bank account. This amount is being set aside for any kind of indeterminate and unanticipated expenses like sudden accidents causing huge medical bills or car repairing expenses etc. What are the factors which shift a demand for money function? In normal circumstances, demand for money is mostly dependent on factors such as price level, level of interest and real income. Kenen (2000) in his analysis has mentioned that, with the increase in the price level the real income, the demand for money also increased proportionately.

In these cases, families as well as various organizations need large volume of money to make higher volume of payments. (Kenen, 396) Generally, my demand for money increases when there is increase in food price and other bills and charges. Using your own average monthly income and your average demand for money, compute your velocity of circulation. In regular circumstances, my velocity of circulation is comparatively low and this is mainly because my normal trend of expenses is less than whatever I earn on a monthly basis.

My idea of keeping aside some portion of salary for any kind of unexpected incidents (in person or damage of my immovable asset) or sudden emergencies helping me to keep this velocity of circulation low. As those unfortunate incidents not happen regularly so my velocity of circulation is low. Computation: Avg. demand for money / Avg. monthly income: 3333.332/ 8333.33 = 0.40 Reference 1. Hülsmann, G. Jorg. The Demand for Money and the Time-Structure of Production. Mises Daily. 2009. Web, accessed on 19.7.2014 2. Kenen, B. Peter.

The International Economy. Cambridge University Press. 2000. Print. 3. Serletis, Apostolos. The Demand for Money: Theoretical and Empirical Approaches, Springer Science & Business Media, 2007 4. Starr, M. Ross. The Price of Money in a Pure Exchange Monetary Economy with Taxation. Econometrica. Vol. 42; No. 1. 1974. pp.45-54. Print