Tuesday, May 24, 2022

Finance vs Economics – Top Differences and Career Paths

Hello everyone hi and welcome to thechannel of WallStreetmojo watch the video till the end and also ifyou are new to this channel then you can subscribe us by clicking the bell icanfriends today we are going to have a tutorial on Finance vs economics andwhich one is better every student who is going in who isabout to offer finance or economics he always is in is in dilemma that whichone is better so we are going to talk about that over here see if you're anaspiring student or are simply curious about the differences between thefinance or economics then this article or this tutorial will aid you in meetingyour curiosity see in simple terms .

Economics and finance are just two sidesof one coin so if you want to succeed in finance you need to know economics aswell economics is more about finding theequilibrium point of demand and supply understanding the average cost andmarginal cost finding differences between the fixed cost and variable costand many such theoretical concepts finance on the other hand is rightextension of this concepts does it's often being seen that people who havemade their mark in finance have often had economics as a background see morescrutiny economics create the foundation on which the finance builds the house soif you want to be finance professional .

You need to know the economics well tounderstand the complexity and vastness of finance in this tutorial wewill look at each of this disciplines separately and then try to comparebetween two so that you can make an informed decision in regards to yourcareer let's begin we'll start with the finance versus economics as a part of adifference and let's see how we can go about with things so let's get at theexcel and we'll write over here as a point of comparison and over here asfinance and over here as economics so once we write this we can start with1st is the branch that we are going to compare so in which branches it has beendivided so if you talk about finance it .

Is divided into corporate financequantitative aptitude we are talking about finance over hereso it includes quantitative aptitude quantitative analysis accounting themanagement accounts risk management financial analyst and fixed income andderivatives but if you talk about economics then it includesmacroeconomics and microeconomics now let's see the second point of differencethat is known as your career option which is the career option which whatare the career option that you can offer in finance and economics infinance you have investment banking corporate finance equity researchprivate equity risk management .

Quantitative analysis project financeand technical analysis but if you talk about economics as a part of this thenyou have statisticians strategists risk management analysts operational researchanalysts insurance underwriters and budget analysis the third is the part aseducation what sort of education you require so if you talk about educationthen you require bachelors in finance again in accountancy if we talk aboutfinance and you have economics mathematics MBA you have a lot of degreelike cfa frm PRM CFP SEMA CMA ACCA CP and so on and so forth but effect foreconomics you have bachelor's degree in economics master's degree in economicsand PHD now the fourth is which are the .

Top forms that are involved in thiswithout the top firms they are Blackstone Goldman Sachs in companyMorgan Stanley for finance I'm talking about Bank of America Merrill Lynchcredits worse Citibank Deutsche Bank HSBC UBS and JPMorgan Chase and company but if you talk about economics mostly top firms thathire economics graduate include the list of the top finance and business firmsadditionally economists are hired by marketing HR retail e-commerce companiesnow let's talk about the other point of difference like what is the work-lifebalance so if we talk about work-life balance then in the first scenariofinance it depends on which sub-domain .

In finance you are working forinvestment it's brutal a query research is still okby side analysts have a balance work life depending on the area you may haveto work around 10 to 18 hours a day but if we talk about economics then you havea balance and much better than the financial analysts and work is noturgent all the time de all the time of the here now let's talk about anotherpoint of difference is the travel see if we talk about finance mostly they arenot required to travel much you can safely assume that 90% of the time isspent on office okay and over here in economics also not much of travel isrequired for economists let's see which .

Are the key words which comes intopicture so I'll write key words so the key words over here are financialmodeling in finance financial modeling basics valuations M&A MPN NPVthat is net present value and IRR but if the key comics word in economics aremacroeconomics microeconomics GDP inflation fiscal policy exchange ratecurrency crude commodities aggregate demand and supply real versus normal anelasticity and saving and investing let's talk about the eighth point thatis the exit of for Trinities so let's talk about exit opportunities and wehave something over here see depending on the chosen area of interest there aresome amazing exit opportunities with the .

Finance sector for example investmentbankers move into private equity or research side site in analyst movinginto buy said analyst profile let's talk about the other part as a part ofeconomics see they include exit opportunities as economic consultantfinancial analyst statistician and actuals now let's see things in terms ofnetworking opportunities ok networking opportunities are is a majorthing for any business for any profession without that it's notpossible to grow see mostly work within the finance industry alumni network isstrong but not varied as found in the consulting but if we talk abouteconomics not much limited within the .

Domain and alumni network is availableto you so let's see what is the outlook now so ifyou talk about the outlook then job opportunities across finance domainslike like you to choose you need to learn financial statement analysisfinancial modeling in valuations project finance quantitative finance riskmanagement investment analysis and many more but if we talk about the outlook oneconomics huge demand of economists in the consulting firms private banks aswell as the public sector is been seen so finally let's look at the outlookeconomics and finance are two different disciplines on the basis of the scope ofthe work of course they are not .

Interrelated and no matter what youchoose you would occasionally need to refer back to some parts of both thesesubjects once in a while but they're different let's understand how differentthey are in simple terms economics is a social science that helps in managementof goods and service subject to the production consumption and other factorsdirectly or indirectly affecting them basically there are only two types ofeconomics that you need to know microeconomics and macroeconomics if youtalk about microeconomics it talks about the single unit or a business andmacroeconomics deals with an industry as a whole there are huge amounts ofeconomists in the consulting firms .

Private banks as well as formed exceptup on the other hand finance is also a science of managing funds subject tothree main factors time risk involved in the transaction and liquidity so thereare many branches of finance and as you go deep in the subject you will realizethat there are more things to learn for example you would start with corporatefinance to have your fundamentals strong then depending on whichever field youchoose you need to learn financial analysis financial modeling andvaluations project finance quantitative finance risk management and portfoliomanagement investment analysis and many more so many people confuse finance withaccounting but finance is much worse .

Than accounting to learn thefundamentals of finance you need to have a basic understandings of accounting butthe scope of Finance is much more than accounting if you are good in maths andlogical reasoning you'd be able to make your mark in finance field now new ideasare born out of two separate but different ideas so if you want to dowell in finance or economics it's better than you learn the basics of the othersfor example if you decide to go for financial domain thebasic knowledge in economics will help you understand complex issues and youwill be able to connect to separate ideas and form concepts while stunningon the other hand if you decide to go .

For economics it will definitely helpyou if you know the fundamentals of finance even as an economic student youwill get to know the practical aspect of how forms work in real world now let'sunderstand the education that is required in finance versus economics soif we talk about finance the world is of Education is vast but still there is abasic structure you can follow if you want to enter into the world ofeconomics of finance let's talk about the economics first see being aneconomist is a great profession of course there are some there arebasically there are basically some things you may dread like repertoryresearch depending more on theoretical .

Dimensions then taking practicalapproach however once you've become an economist you could your growth would bedynamic and if you wish to learn and be a better economists top of the curve youwould get all the opportunities to do so but what you need to do to be Caramanicato become an economist do you need to follow any basic structure the answer isyes absolutely yes so now there are two things the first one the first thing youneed to decide what you want to become a top-notch economist or a professional soa top-notch economist is like you are in in the league again and in organizationwho looks at the profession to earn for his living so let's say you want tobecome a top-notch professional so you .

Need to earn your bachelor's degree ineconomics where you will study business management and economics but to be atop-notch or better to say top 10% of the economists in the world you need topower of you need the power of knowledge so you need to go for the master degreein economics as well which you will be able to and then finally it's better ifyou earn a PhD as well once you are a PhD your opinions and judgment would bevalued much more than a passionate agree holder or a master degree holder so I'llshow you a chart that looks at the career requirements of an economist nowas you can see the career requirements the degree level bachelor degreerequired most positions in the private .

Sector sector and academia require agraduate degree degree field is a can the experience is internships are reallyhelpful if you have any such sort of other skills that will be really goodthe computer your spreadsheet software off the software and statistical youknow you need to be good with the MS Office the key skills math analyticaland writing skills the salary is close enough to the median of 95710 close enough to one $1,20,000 median ofall the economists now the finance professional is much diverse thaneconomics profile even many economics graduate often go for finance domainbecause they feel that they want to .

Explore more of the practical aspect ofthe business then devising theoretical model so if we want to go in financedomain what would be your education requirement let's have a look at thediverse opportunities the basic thing about finance is that the first you haveto have your bachelor's degree it's always better if you complete yourbachelor's in finance accounting economics of mathematics this subjectscan be foundation for your future course of action so there are many options fromthe merit of opportunities you need to decide which direction you want to gonow I'll tell you each and every one if you want to get into as if you want towork as an investment a professional .

Investment professional then in thatparticular scenario if you want to go for investment profession the best thingis to do is to go for CFA CFA exam will not only equip you to becoming aninvestment professional but will also help you to become an expert ininvestment analysis market analysis and in how to pick the right investmentopportunities for your plans now if you want to become a management professionallet's say if you don't want to be an investment professional but you want tobe a management professional then in that particular scenario you can alsochoose to become a management professionals but right by doing MBA infinance from a reputed college or .

University so if we can if we can startpursue you and be a degree from a top-notch university you would be ableto get into Investment Banking profession or corporate finance of anylarge corporations and after doing MBA you will become more of a businessprofessional then a core finance professional now if you want to give ifyou were if you want to go to risk management as a risk managementprofessional then you can choose to go for frm exam CRM examerm that is energy risk management and many more the sort of risk managementcourses like actuaries you can become a risk management professional within afew years of .

Constant learning and practice now ifyou want to go as an accountant then in that particular scenario you can alsodecide to go for CA that is chartered accountant CPA and or any otheraccounting courses to become a public accountant or else you can join aprivate bank as well so as a finance professional the opportunities areendless the above are the most sought-afterand this are the courses students should choose the most you can also go for thecourses like CS that is company secretary ship Cost Accountantmanagement accountancy etc now what are the primary tasks and roles of infinance and economics if we talk about .

The rules in finance and economics thenlet's talk about the main responsibilities of an economist infinance see the primary tire task of an economist is that even if it seems thateconomists is mostly dealing with the theoretical jargons however she alsoneeds to analyze and interpret a huge sample of data let's look at the primarytask of the economist he 1st economist main work revolved aroundaround giving advice's to the various stakeholders in regards to economicsthey also need to gather the data comprehend various sampling techniquesto conduct surveys and creating different economic metric now oncethe forecasting is done they need to .

Analyze and interpret the trends andcome to a conclusion of how the form strategy needs to be change if at alland finally hurt you the duties the duties also includes writing varioustechnical and non-technical reports to send across to the top management sothat they can take proper actions towards changing product policysustainability of business and many such other factors so an economist also needsto give Various presentation on on the research analysis and interpretation ofthe top management executives so that they can make informed decision aboutthe business what are the primary duties of the finance professional let'sdiscuss that see now finance profession .

And profession is very very diverse andas a student can choose different profession in each profession would havedifferent key tasks it is difficult to pinpointonly few primary tasks for all of them so we will give like a brief overview ofthe primary tasks of a financial management professional the primarytasks may be different in case you may choose to go in any other finance domainlet's talk about the primary tasks of finance management profession the mainresponsibilities the finance management professional is tois to source the funds from the market it may be in the form of direct loanfrom the financial institutions or .

Conducting IPO if it is if it's thefirst time or sending more shares to the existing and new shareholders or morefunds once the funds are arranged it's time to investing money in the businessso this is also a huge concern for finance management professional theyneed to know exactly where to invest so that the business gets maximum ROI fromthe investment so if the business makes profit how to distribute the profit ifat all or to plow back or for in reinvestment in the business should beone of the most important duties of finance management professional finallythe finance management professional needs to needs to read report or presenthis finding to the top management to get .

The approval so that he can go ahead andcarry out his primary responsibilities let's see the work/life balance in bothof them and let's see what is in one that work-life balance as you've alreadydiscussed see usually the economists have a greater work/life balance as theywork acts as a support to management decision that does not mean that thework of the economists is not important how it does not need to be urgent allthe time throughout the year in case of the finance professional if you talkabout then the work-life balance varies from the profession to profession forexample if you are an investment banking professional your work-life balance willbe none and your you won't get Vicens to .

Rest and spend time with your familieseven some days you need to spend overnight at offices to meet therequirements of the clients on the other hand if you're an equityresearch analyst you will achieve a good life work/life balance and you will alsoget an Impala fortune to spend your weekends with your inner circle or workpressure is usually much more lesser than investment liking professionals sothe work-life balance depends on which finance domain you pick as a professionsee you can see as an investment banking in the jobs now let's see thecompensation part if you see this is the most important thing because everyone isalways concerned regarding this .

Particular thing if you see thecompensation then we'll have a look at the compensation of the economist andfinance professional according to the salary.com and an economics an economistearns around close enough to one twenty one three fifty seven dollars for annumas an average salary so you can understand thethe P is amazing let's have a glance of the chart and get an overall idea aboutthe compensation of an economist now if you see the median salary then in incase of economists the median is $121,357 that we have already discussed if in thelower end then the 10% side is 86 94 25% 100 072 to 751%gets around 148748 and 90 percent around 173 686 so .

From the above chart it's clear that ifyou can reach up to the top 10% of the curve as an economist you will earnaround 173 686 okay and now let's look at the compensation of the financemanagement professional if Z the salary of the finance professional the medianis close enough to 84800 and you can see the salaryis between the median number seems to be really good the salaries above 100 K thebonuses are good the profit sharing czar and you can see the total pay is about128 in between 45 so from the above table chart it's clear that you know thefinance management professional earns around 484 thousand eight hundred perannum on an average and it's just .

Revolving around one dimension of thecompensation we will try to look at the different aspect of it and that that isexperience wise compensation let's have a look at that if you see over here thisis the pay by the experience level for the finance managers if the entry levelyou're starting is close enough to 70 K and then it goes on and above as youreach to the 5 to 10 years then you reach around 90 K as you go about if youhave experience of 10 to 20 years you reach around a hun100 K or close enoughto 100 K and then after on the late greater than 20 years of career then yougo down so let's make the final conclusion of Finance versus economicssee finance and economics are very .

Different in terms of career skills exitopportunities etc so typical economics graduate needs to complete masters andPHD to get the excellent career opportunity however finance graduatescan complement the graduation by taking certification courses like cfa frm PRMto boost the chances of climbing up in the finance career there are some howfocused on options economists however in finance there are broad varieties ofchoices to choose from so opt one that interests you the mostso that's it for this particular topic if you have learned and enjoyed watchingthis video please like and comment on this video and subscribe to our channelfor the latest updates thank you .

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