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Wall Street has a powerful presence in our society. Its financial firms make decisions that affect the fortunes of millions of people in the U.S. and around the world.

A lot of our personal savings are invested through the financial services industry into the national and global economy.

How does Wall Street use our savings to provide value in our society?

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Return On Investment

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Investing is all about using assets — cash, savings, property, stocks — as capital to gain more assets in the future. This is called return on investment (ROI).

Professional investors invest our personal savings on our behalf into profitable business ventures to maximize ROI.

From Assets To Investments

Large institutions called Asset Owners, such as pension plans and others that invest on our behalf, can invest our savings directly or outsource them to asset management firms .

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  • individuals and high-net worth investors

  • pension funds, endowments, and foundations

  • often pay asset managers to manage investments

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  • assess the needs & risk factors of clients

  • recommend investment strategies to maximize returns while minimizing risks

  • manage those investments for fees and sometimes a share of the profits

Among other things, professional investors consider:

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What investment timelines serve their clients' best interests?

Should they take advantage of short-term trends, or is it more advantageous to invest long-term?

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How much risk are clients willing to tolerate on their investment?

Should they invest in high risk/high reward stocks, or more predictable and safe investments like bonds?

Wider Effects

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Professional investors use their expert knowledge to connect our long-term savings towards productive uses of capital.

This injects money into businesses across the country and around the world, creating jobs and driving innovation.

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Take Action

Flaticon IconDo you want to know more about the role financial investors play in the economy?

Research different types of investors to see how they allocate capital across different sectors of the economy:

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This Byte has been authored by

TF

Tariq Fancy

Social Entrepreneur

SB

Steve Birek

Virtual Facilitator