Financial literacy is the education and understanding of various financial areas.

This topic focuses on the

ability to manage personal finance matters in an efficient manner, and it includes the knowledge of making
appropriate decisions about personal finance such as investing, insurance, real estate, paying for college,
budgeting, retirement and tax planning.

Financial Planning & Advice Industry?

This industry comprises companies that provide financial planning, financial advice and wealth
management to individuals and business clients. Operators also offer advice, in conjunction with other
activities such as portfolio management, protection planning and brokerage services. This industry does
not include mutual fund companies, hedge funds, discount brokers, insurance brokers or other companies
that deliver these services, outside the context of a written financial plan.

An algorithm is set of rules for accomplishing a task in a certain number of steps. One common example is
a recipe, which is an algorithm for preparing a meal. Algorithms are essential for computers to process
information. As such, they have become central to the daily lives of humans, whether someone orders a
book online, makes an airline reservation or uses a search engine.

Business plans are required for all small businesses seeking loans or investors. Financial assumptions and
projections are critical components of all business plans. Three universal financial presentations are
expected in all business plans. You must include a projected income statement, balance sheet and cash
flow statement for the coming three to five years. Along with the numbers, include a narrative that explains
your assumptions and how the line items were computed.

Exchange-Traded Fund (ETF)'

An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a
basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock
exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically
have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative
for individual investors.

Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated once at the end
of every day like a mutual fund does.

Risk Tolerance: Your account has been assigned one of six Risk Tolerance classifications, as defined
below, based on responses to the Stifel Risk Assessment associated with your account. Your risk tolerance
for an account should reflect the amount of risk you are comfortable with for that account. It is important to
notify Stifel when there are material changes in your financial condition or risk tolerance.
1. CONSERVATIVE: A Conservative investor values protecting principal over seeking appreciation. This
investor is comfortable accepting lower returns for a higher degree of liquidity and/or stability. Typically, a
Conservative investor primarily seeks to minimize risk and loss of principal.
2. MODERATELY CONSERVATIVE: A Moderately Conservative investor values principal preservation, but
is comfortable accepting a small degree of risk and volatility to seek some degree of appreciation. This
investor desires greater liquidity, is willing to accept lower returns, and is willing to accept minimal losses.
3. MODERATE: A Moderate investor values reducing risks and enhancing returns equally. This investor is
willing to accept modest risks to seek higher long-term returns. A Moderate investor may endure a short-
term loss of principal and lower degree of liquidity in exchange for long-term appreciation.
4. MODERATE GROWTH: A Moderate Growth investor values higher long-term returns and is willing to
accept considerable risk. This investor is comfortable with short-term fluctuations in exchange for seeking
long-term appreciation. The Moderate Growth investor is willing to endure larger short-term losses of
principal in exchange for the potential of higher long-term returns. Liquidity is a secondary concern to a
Moderate Growth investor.
5. MODERATELY AGGRESSIVE: A Moderately Aggressive investor primarily values higher long-term
returns and is willing to accept significant risk. This investor believes higher long-term returns are more
important than protecting principal. A Moderately Aggressive investor may endure large losses in favor of
potentially higher long-term returns. Liquidity may not be a concern to a Moderately Aggressive investor.
6. AGGRESSIVE: An Aggressive investor values maximizing returns and is willing to accept substantial
risk. This investor believes maximizing long-term returns is more important than protecting principal. An
Aggressive investor may endure extensive volatility and significant losses. Liquidity is generally not a
concern to an Aggressive investor.

Long term financial goals: FINANCIAL STRATEGIES

1. Have an emergency fund
2. Spend less than you make
3. Protect yourself and your family (insurance)
4. Let go of negativity money ideals
5. Increase learnings to increase earnings

10 Financial Tools

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Keeping up with the financial side of owning a small business can feel like a never-ending job. From invoices
to expenses to day-to-day accounting and dealing with the IRS, it’s a wonder that entrepreneurs ever find
the time to deal with actually producing goods or providing services.

Fortunately, technology has brought about a multitude of tools to save small business owners time and
headaches on daily financial tasks. To streamline your financial management process so you can get back
to your real job, check out these 10 financial tools for your small business.

1. Accounting Software
QuickBooks has long been the gold standard for small business accounting, but online accounting solutions
such as Xero are recently gaining traction. Whatever program you choose for your accounting, make it work
for you by choosing a tool that’s both as robust and as flexible as possible.

2. Budgeting Tools
Creating a realistic budget — and sticking to it — is crucial to your small business’s financial success.
Depending on your accounting software, you may be able to create budgets for your business right there
without needing a separate tool. If you do need a separate, stand-alone budgeting tool, you should definitely
check out PlanGuru.

3. Payroll Management System

Payroll management is time-consuming and prone to mistakes. Single Grain CEO Eric Siu recommends
payroll/HR systems ZenPayroll and Zenefits to help you streamline the payroll process and eliminate costly
inefficiencies. These are just two of many payroll management tools; frequently these systems easily
integrate with other accounting or storefront tools you’re already using. SurePayroll can even calculate and
automatically pay local, state, and federal payroll taxes. How much easier can payroll get?
4. Agile Billing
The smoother and more nimble your billing process, the quicker payments will be made and processed —
and the faster the cash will flow into your business. With a quick, cloud-based billing system (try FreshBooks
or Bill.com) you can shorten the billing process and even increase customer satisfaction.

By implementing agile billing tools and processes, you’ll both improve customer experiences and shorten
accounts receivables delays.

5. Financial Dashboard
Implement a dashboard such as LivePlan or InDinero to see a snapshot of your small business’s financial
health. These programs will allow you to track key performance indicators (KPI’s) to measure whether your
business is “thriving and not just surviving,” writes Sabrina Parsons.

And by keeping tabs on these important financial measurements all in one place with clear visuals, you’ll
be able to see immediately if you’re going off financial course — and take steps to get back on track.

6. Cash Flow Analysis

Whether you use your accounting software’s cash flow statement capability, a cash flow-specific tracking
tool such as Float, or a simple spreadsheet, accurately measuring your cash flow on a regular basis is
crucial to keeping your business prepared for any financial eventuality. Cash flow analysis helps you to
weather ups and downs in your cash balance by using past patterns in data to forecast your financial future.

7. Inventory Management
Efficiently track your inventory all the way from your purchase of resale items to a customer’s order
fulfillment with cloud-based solutions like SOS Inventory or Scout’s topShelf. In addition to tracking your
goods, these tools can generate sales reports, set up automatic low inventory alerts, and manage order
packing and shipping.

8. Expense Tracking
Little business expenses such as gas, meals, and cabs add up quickly and are hard to track. With an
expense report tool such as Expensify or Xpenditure, employees can scan receipts or add cash expenses
from their mobile devices and upload them; then you can easily import the information for approval, rebilling,
expense accounting, and reimbursement.

9. Business Credit Card

Anita Campbell recommends opening a business credit card in order to improve your business credit
history, gain access to higher credit limits for business borrowing, and receive business-specific rewards
and discounts.

Diversification is a risk management technique that mixes a wide variety of investments within a portfolio.
The rationale behind this technique contends that a portfolio constructed of different kinds of investments
will, on average, yield higher returns and pose a lower risk than any individual investment found within the
portfolio.

A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee,
the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are
established to provide legal protection for the trustor’s assets, to make sure those assets are distributed
according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or
reduce inheritance or estate taxes.
In finance, a trust can also be a type of closed-end fund built as a public limited company.
Accountability is the responsibility of either an individual or department to perform a specific function in
accounting. An auditor reviewing a company's financial statement is responsible and legally liable for any
misstatements or instances of fraud. Accountability forces an accountant to be careful and knowledgeable
in their professional practices, as even negligence can cause them to be legally responsible.

Time is of the essence

Contractual provision that requires prompt and timely fulfillment of obligations under the contract; failure to
complete performance under time constraints set forth in the document may constitute a breach. Example:
“Time is of the essence in the completion of this contract.”

Financial Management means planning, organizing, directing and controlling the financial activities such as
procurement and utilization of funds of the enterprise. It means applying general management principles to
financial resources of the enterprise.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of financial
resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.

2. To ensure adequate returns to the shareholders which will depend upon the earning capacity,
market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in
maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate
rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital so that a
balance is maintained between debt and equity capital.

The accounting term financial flexibility is used to describe a company's ability to react to unexpected
expenses and investment opportunities. Financial flexibility is usually assessed by examining the
company's use of leverage as well as cash holdings.

Expertise in finance can contribute to a company's short-term success by facilitating cash flow and to its
long-term success by lessening interest payments and finance charges. Savvy financing for a small
business involves making ongoing choices about borrowing capital, deferring purchases and prioritizing
expenditures. Most companies have multiple financing options, but the least expensive avenues are
sometimes the most complicated to access. Successful small business financing also requires a knack for
timing borrowing, spending and repayment while weighing a wide range of variables.

Investment assets are tangible or intangible items obtained for producing additional income or held for
speculation in anticipation of a future increase in value. Examples of investment assets include mutual
funds, stocks, bonds, real estate, and retirement savings accounts such as 401(k)s and IRAs.
Fixed Income & Bonds
Fixed income investments generally pay a return on a fixed schedule, though the amount of the payments
can vary. Individual bonds may be the best known type of fixed income security, but the category also
includes bond funds, ETFs, CDs, and money market funds.

Types of Investment Risks By Investopedia

Interest Rate Risk

Interest rate risk is the possibility that a fixed-rate debt instrument will decline in value as a result of a rise
in interest rates. Whenever investors buy securities that offer a fixed rate of return, they are exposing
themselves to interest rate risk. This is true for bonds and also for preferred stocks.

The following article, Forces Behind Interest Rates, will deepen your understanding of the importance of
interest rates and what makes them change.
Furthermore, understand the various factors that influence interest rates, so that you can learn to anticipate
their movements for your benefit in the article, Trying to Predict Interest Rates.

Business Risk
Business risk is the measure of risk associated with a particular security. It is also known as unsystematic
risk and refers to the risk associated with a specific issuer of a security. Generally speaking, all businesses
in the same industry have similar types of business risk. But used more specifically, business risk refers to
the possibility that the issuer of a stock or a bond may go bankrupt or be unable to pay the interest or
principal in the case of bonds. A common way to avoid unsystematic risk is to diversify - that is, to buy
mutual funds, which hold the securities of many different companies.

Credit Risk
This refers to the possibility that a particular bond issuer will not be able to make expected interest rate
payments and/or principal repayment. Typically, the higher the credit risk, the higher the interest rate on
the bond.

Taxability Risk
This applies to municipal bond offerings, and refers to the risk that a security that was issued with tax-
exempt status could potentially lose that status prior to maturity. Since municipal bonds carry a lower
interest rate than fully taxable bonds, the bond holders would end up with a lower after-tax yield than
originally planned.

Call Risk
Call risk is specific to bond issues and refers to the possibility that a debt security will be called prior to
maturity. Call risk usually goes hand in hand with reinvestment risk, discussed below, because the
bondholder must find an investment that provides the same level of income for equal risk. Call risk is most
prevalent when interest rates are falling, as companies trying to save money will usually redeem bond
issues with higher coupons and replace them on the bond market with issues with lower interest rates. In a
declining interest rate environment, the investor is usually forced to take on more risk in order to replace
the same income stream.

Inflationary Risk
Also known as purchasing power risk, inflationary risk is the chance that the value of an asset or income
will be eroded as inflation shrinks the value of a country's currency. Put another way, it is the risk that future
inflation will cause the purchasing power of cash flow from an investment to decline. The best way to fight
this type of risk is through appreciable investments, such as stocks or convertible bonds, which have a
growth component that stays ahead of inflation over the long term.
Liquidity Risk
Liquidity risk refers to the possibility that an investor may not be able to buy or sell an investment as and
when desired or in sufficient quantities because opportunities are limited. A good example of liquidity risk
is selling real estate. In most cases, it will be difficult to sell a property at any given moment should the need
arise, unlike government securities or blue chip stocks.

Market Risk
Market risk, also called systematic risk, is a risk that will affect all securities in the same manner. In other
words, it is caused by some factor that cannot be controlled by diversification. This is an important point to
consider when you are recommending mutual funds, which are appealing to investors in large part because
they are a quick way to diversify. You must always ask yourself what kind of diversification your client
needs.

Reinvestment Risk
In a declining interest rate environment, bondholders who have bonds coming due or being called face the
difficult task of investing the proceeds in bond issues with equal or greater interest rates than the redeemed
bonds. As a result, they are often forced to purchase securities that do not provide the same level of income,
unless they take on more credit or market risk and buy bonds with lower credit ratings. This situation is
known as reinvestment risk: it is the risk that falling interest rates will lead to a decline in cash flow from an
investment when its principal and interest payments are reinvested at lower rates.

Social/Political / legislative Risk

Risk associated with the possibility of nationalization, unfavorable government action or social changes
resulting in a loss of value is called social or political risk. Because the U.S. Congress has the power to
change laws affecting securities, any ruling that results in adverse consequences is also known as
legislative risk.

Currency/Exchange Rate Risk

Currency or exchange rate risk is a form of risk that arises from the change in price of one currency against
another. The constant fluctuations in the foreign currency in which an investment is denominated vis-à-vis
one's home currency may add risk to the value of a security.

American investors will need to convert any profits from foreign assets into U.S. dollars. If the dollar is
strong, the value of a foreign stock or bond purchased on a foreign exchange will decline. This risk is
particularly augmented if the currency of one particular country drops significantly and all of one's
investments are in that country's foreign assets. If the dollar is weak, however, the value of the American
investor's foreign assets will rise.

Understandably, currency risk is greater for shorter term investments, which do not have time to level off
like longer term foreign investments.

Cost–benefit analysis (CBA), sometimes called benefit costs analysis (BCA), is a systematic approach to
estimate the strengths and weaknesses of alternatives (for example in transactions, activities, functional
business requirements or projects investments); it is used to determine options that provide the best
approach to achieve benefits while preserving savings.The CBA is also defined as a systematic process
for calculating and comparing benefits and costs of a decision, policy (with particular regard to government
policy) or (in general) project.

Broadly, CBA has two main purposes:

1. To determine if an investment/decision is sound (justification/feasibility) – verifying whether its

benefits outweigh the costs, and by how much;
2. To provide a basis for comparing projects – which involves comparing the total expected cost of
each option against its total expected benefits.