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What Is Money Management?
Let me tell you directly: money management is all about budgeting, saving, investing, and spending, whether you're handling your own finances, a household's, or an organization's. In this piece, I'm focusing on the key role of money managers in investments, and I'll point out the top players like BlackRock, Vanguard, and Fidelity based on their assets under management.
Key Takeaways
You need to know that money management covers budgeting, saving, investing, and spending to control how capital is used by individuals or groups. It also includes investment and portfolio management, which financial advisors or platforms often handle. If you manage money poorly, it can cause financial stress, but doing it right builds financial stability. BlackRock, Vanguard, and Fidelity stand out as the biggest global money managers by assets under management. And remember, personal finance apps make it easier for you to handle your finances with accessible planning tools.
Exploring the Basics of Money Management
Money management is a wide-reaching term that pulls in services and solutions from the whole investment industry. You can use various resources and apps to manage every part of your personal finances. As your net worth grows, you might turn to financial advisors for professional help. These advisors typically work with private banks and brokers, assisting with estate planning, retirement, and other areas.
In the expanding fintech market, personal finance apps are there to support you in almost every financial aspect. Managing money is central to the investment world. Investment companies provide you with fund options that cover all investable asset classes in the market. They also serve institutional clients by handling retirement plans, endowments, and foundations.
Leading Global Money Managers by Asset Size
Global investment managers offer funds and services to both retail and institutional clients. You'll find two main types: actively managed funds and passively managed funds. The passive ones track specific indexes and usually come with low fees.
Top Global Money Managers by Assets Under Management (AUM)
- BlackRock Inc.: Started in 1988 as a $1 division of the BlackRock Group, it reached $17 billion in AUM by 1993 and hit $8.6 trillion by 2022. Its iShares ETF division holds about $2.5 trillion in AUM, making up roughly 29% of total assets, with 13,000 professionals in over 30 countries.
- The Vanguard Group: Founded by John C. Bogle in 1975 in Valley Forge, Pennsylvania, it serves over 30 million clients in 170 countries and has grown to more than $8 trillion in assets, ranking as the world's second-largest thanks to its low-cost funds.
- Fidelity Investments: Founded in 1946 by Edward C. Johnson II, it had over 40 million customers, $10.3 trillion in total assets, and $3.9 trillion in AUM as of December 31, 2022, offering hundreds of mutual funds across various categories like domestic equity, foreign equity, and more.
What Is the Difference Between a Money Manager and an Asset Manager?
As the names suggest, money managers handle money, and asset managers handle assets. But since assets are basically money, you can think of the two as essentially the same.
What Are the Main Principles of Money Management?
The core principles are income, investing, savings, and spending. If you balance them properly, they can help you maximize your financial well-being.
What Is the Goal of Money Management?
The main goal is to maximize your wealth.
The Bottom Line
Money management includes budgeting, saving, investing, and spending, and it's crucial for your personal financial health as well as the broader financial market. On a personal level, good management helps you avoid debt cycles and stress, using tools like advisors and apps. On a larger scale, firms like BlackRock, Vanguard, and Fidelity manage huge assets, offering services to retail and institutional clients with trillions under management. By understanding this, you can make better financial decisions and build your wealth.
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