Financial Stress and Investing Don’t Mix

he Situation

According to a recent study done by the American Psychological Association, one of the leading causes of stress for Americans is financial instability. Nearly 80% of those surveyed said that financial problems were the leading cause of their stress (Jones 2009). Financial stress is being felt as a result of our current economic situation that has forced many Americans to deal with the loss of a job or home, a shift in spending habits, or maybe even an entire lifestyle change. The economic turmoil has brought to the surface many concerns about financial security and even one’s ability to retire when originally planned. These types of financial stress have been shown to affect people’s confidence in their ability to make an informed decision about personal finances and investments. A person’s propensity to save money, create a budget, and control impulses is due largely to their perceived level of control over their financial future as well as their knowledge about financial management. How people feel about their finances is directly linked to how they feel about their lives.

The Problem

In a nutshell, financial stress reduces an investor’s confidence, decision making abilities, and their perceived level of control (McCallen 2009). To be a successful investor in the long run, one needs to be focused and trade without emotion or distractions. Trading should be based off of logic (cost vs. benefit) rather than emotion or stress. Trading based off of emotion and stress can lead one to making irrational decisions and trading with a sense of urgency. In the end, that sense of urgency can make investing decisions reactive as opposed to proactive.

The Solution

Knowledge is power. A lack of knowledge couple with financial stress can lead to some very poor decisions in your portfolio. Failure to properly manage finances can have long-term consequences on your investment portfolio. Educating yourself on the proper ways to manage your finances is the key to reducing your financial stress. With education, people can change their expectations and their behaviors that are currently leading them down the wrong path. Investors who are knowledgeable about finances are more likely to behave in a responsible way with their money (Taylor and Overby 1999). Financial stability will help give you back the confidence and sense of control over your financial future. In addition, you will be able to make sound investing decisions with a clear point of view.


Jones, Dan. “Meeting your financial goals.” Paraplegia News 63.7 (2009): 24+. Academic OneFile. Web. 27 May 2010.

McCallen, Joan. “Saving for tomorrow lowers stress today.” Public Management 91.3 (2009): 5. Academic OneFile. Web. 27 May 2010.

Taylor, D.S. and Gail Overby. 1999. Financial Practices and Expectations of Students and Non-Student Consumers. Journal of Family and Consumer Sciences, 91 (4): 39-42.

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Role of Merchant Banking Services in Our Economy

Merchant banks found its origin in the early periods in the country of Italy by the Italian merchants. The main function of the merchant banking services include providing financial advice and services to corporate as well as individuals. These banks act as a sort of intermediary between capital issuers and the buyers of the securities. These securities are issued by different companies in the stock markets to raise funds.

The Necessity of Merchant Banking Services

The economy of the country is often afflicted with different unpredictable conditions like inflation, unemployment, stagnation and so forth. The need to sustain a steady growth is necessary for corporations and individuals which is possible only with a long term strategy and financial options. The merchant banking services provide solutions and financial options.

These banks provide advisor services to clients based on a particular fee. They also provide other financial services to mergers and clients. It is the only financial institute that invests its capital in the clients’ company. It acts as an intermediary between those who possess capital and those who need capital.

To help their clients with a number of financial options, the merchant banking services operate in a number of countries all over the world. In this manner the clients have the opportunity to survey the different financial options to ensure better growth.

Functions of the Merchant Banking Services

These banks have a number of functions and some of the most important among them include:

Raise funds: one of the main functions of this banker includes helping the clients’ company to raise funds from the markets. The banks help to manage equity offerings and debt. This function further includes underwriting support, pricing and marketing of the issue, stock exchange listing, allotment and refund, offer document registration and so forth.
Offer advisory services: these banks also offer advisory services to its clients for a proposed fee.
Security distribution: the functions of these banking services also include distribution of different types of securities like fixed deposits, equity shares, mutual fund products, commercial paper and debt instruments.
Aid in projects: these banks also provide aid in the projects undertaken by the clients by helping them to visualise the concept of the project. The feasibility of the project is also analysed by these banks. The clients are also given support to prepare project reports.
Overall financial reconstruction: the merchant banking services provide better financial options and solutions to the clients. They help the clients to raise funds through cheaper resources. With the aid of other financial institutions, these banks also help to revive the sick units of the clients’ companies.
Offer advice on management of risks: another important function performed by these banks includes providing timely advice on risk management. The merchant banker provides advice on different strategies adopted by the clients.
Today the merchant banking services provide a number of other services like loan syndication, credit acceptance, counselling of mergers and acquisitions, management of portfolio and so forth. They also assist companie

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