Business

Scenario A
The young couple needs a financial institution that can guarantee them long term returns on their investment portfolio. For these reasons, they should select a reputable mutual fund that will invest their disposable income in stable assets with a good rate of return. By reinvesting the dividends, their capital base will grow assuring them of considerable savings in their old age. Mutual funds spread the risks by investing in a number of stocks rather than concentrating their investment in a few equities. This reduces the possibility of one losing all their money due to a crisis in a particular industry. The more shares one buys in a mutual fund, the greater their income potential.  The redeemable shares issues by the fund make it possible for one to liquidate their investment at will to meet emergency needs. This will cushion the couple against any crisis.

Scenario B
The student needs to partner with a financial institution that understands her needs. She needs to develop a culture of saving loans to finance her education and people who can act as credit references. Her best option is to join a local savings and loans association that will accept her savings and determine the loan amount she is entitled to based on her banking history and deposits. SLs have account restrictions which discourage depositors from making unnecessary withdrawals.

Such institutions are built on trust, and depositors are familiar with one another. This requirement is necessary, as guarantors are required for one to take a loan. Unlike other financial institutions, SLs restrict their operations to the local area. Since she plans to live in the area until she completes her education, this fits in well with her overall plans.

Scenario C
The small business owner needs a financial institution with a wide reach and which offers a number of financial services. Her best choice is to join a commercial bank. Such banks have a number of branches countrywide thus ensuring she has easy access to her funds.

Commercial banks offer a variety of loans to meet the customers needs. These include capital loans, asset financing, overdraft facilities, and bridging loans. Banks have also introduced investment services to enable their clients acquire stocks and bonds from the stock exchange. This aspect serves the needs of this particular business owner very well.