Examples of financial intermediaries
Examples of financial intermediaries
1. Insurance
companies
If you have a
risky investment. You might wish to insure, against the risk of default. Rather
than trying to find a particular individual to insure you, it is easier to go
to an insurance company who can offer insurance and help spread the risk of
default.
2. Financial
advisers
A financial
adviser doesn’t directly lend or borrow for you. They can offer specialist
advice on your behalf. It saves you understanding all the intricacies of the
financial markets and spending time looking for best investment.
3. Credit
union.
Credit unions
are informal types of banks which provide facilities for lending and depositing
within a particular community.
4. Mutual
funds/ investment trusts
These are
mutual investment schemes. These pool the small savings of individual investors
and enable a bigger investment fund. Therefore, small investors can benefit
from being part of a larger investment trust. This enables small investors to
benefit from smaller commission rates available to big purchases.
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