Money management involves the comprehensive process of overseeing budgeting, saving, investing, and spending, whether for an individual or a group. This can also pertain more specifically to investment and portfolio management.
Primarily, within financial markets, money management refers to decision-making about investments for large funds, such as mutual funds or pension plans.
Key Insights
- Money management encompasses the methods by which individuals, households, or organizations track and manage their finances.
- Often, the term is used to refer specifically to investment and portfolio management practices.
- Financial advisors and various personal finance technologies are increasingly accessible, aiding individuals in better money management.
- Mismanagement of money can lead to ongoing debt and financial difficulties.
- The world’s top money management firms by assets under management (AUM) include BlackRock, Vanguard, and Fidelity.
Understanding Money Management
Money management is a broad field including tools and services designed to aid in investment management.
Consumers today have access to numerous applications and resources that allow self-management of virtually all aspects of personal finances. As an individual’s net worth grows, they may seek out professional services offered by financial advisors. Financial advisors provide comprehensive money management strategies, which can include estate planning, retirement planning, and more. As financial technology progresses, a multitude of personal finance apps are available to assist consumers in managing various facets of their finances.
Investment firms also play a pivotal role in money management within the investment industry, offering various investment funds covering all asset classes available in financial markets.
These funds are available to institutional clients as well, with investment solutions tailored for retirement plans, endowments, foundations, and more.
Leading Money Managers by Assets
Global investment managers cater to both retail and institutional investors, providing management services and funds across all asset classes. Popular fund types include actively managed funds and passively managed funds, with the latter generally tracking indexes and charging lower fees. Here are the top global money managers by assets under management (AUM):
BlackRock Inc.
Founded in 1988, BlackRock Inc. started as a $1 division of the BlackRock Group. By 1993, it had grown to $17 billion in AUM and reached $8.6 trillion by 2022. BlackRock’s ETF division, iShares, manages approximately $2.5 trillion in AUM globally. The firm employs around 13,000 professionals and operates in over 30 countries worldwide.
The Vanguard Group
The Vanguard Group, one of the largest and most renowned investment management companies, serves over 30 million clients in 170 countries. Established by John C. Bogle in 1975, Vanguard now manages over $8 trillion in assets, second only to BlackRock. Its low-cost mutual funds have significantly contributed to its growth.
Fidelity Investments
Fidelity Management & Research Co. was established in 1946 by Edward C. Johnson II. As of December 31, 2022, Fidelity had over 40 million customers, managing $10.3 trillion in total assets and $3.9 trillion in AUM. The firm’s extensive range of mutual funds includes domestic and foreign equity, sector-specific, fixed-income, index, money market, and asset allocation funds.
Money Manager vs. Asset Manager: What’s the Difference?
While “money manager” and “asset manager” might seem different, they virtually represent the same concept: overseeing the management of financial assets or monetary resources.
Fundamental Principles of Money Management
Key principles include the balance of income, investing, saving, and spending. Achieving a harmonious balance among these can significantly improve one’s financial health.
What is the Goal of Money Management?
The primary aim of money management is to optimize and maximize wealth.
Final Thoughts
Money management involves a broad spectrum of activities, including budgeting, saving, investing, and spending, whether on an individual or organizational level. In financial markets, money management equivalently refers to substantial investment firms managing client funds. The leaders in this domain - BlackRock, Vanguard, and Fidelity - oversee an array of renowned mutual funds and pension plans.
Related Terms: capital, investment management, financial markets, mutual funds, pension plans, financial advisors, personal finance apps, asset classes, endowments, retail investors, institutional investors, assets under management
References
- Sovereign Wealth Fund Institute. “Rankings by Total Managed AUM”.
- BlackRock. “Introduction to BlackRock”.
- iShares. “Who We Are”.
- Vanguard, via Internet Archive. “Fast Facts About Vanguard”.
- Fidelity. “We Are Fidelity”.
