RSPH Blogs - Finances!

  How Are Investment Banks Different From Commercial Banks? Both are "banks," so it's an easy mix-up — but investment banks and commercial banks function quite differently. We've covered each individually before; today, let's put them side by side. → Related: What Are Investment Banks? (#73) , How Do Banks Work? (#72)** What Do They Actually Do? Investment Banks help businesses raise capital by connecting them with investors — acting as a guaranteeing intermediary in the process (a function called underwriting ). They're also heavily involved in mergers and acquisitions , advising companies on buying, selling, or merging with other businesses. Commercial Banks (the kind most of us interact with daily) issue loans, handle everyday transactions like transfers, and collect deposits — paying depositors a portion of interest in return for holding their money. Who Benefits, and How? Investment banks primarily serve businesses and investors directly — helping the ...

  Were CDOs & CDS the Real Cause of the Great Recession? CDOs and CDS played a genuinely significant role in the 2008 financial crisis — the full mechanics are covered in detail in the dedicated case study below. → Related: The Global Recession/Crisis of 2008 (#49) , How Do Banks Work? (#72)** Today, rather than retell that full story, let's focus on the actual question: were CDOs and CDS themselves the real cause of the crisis — or just the mechanism through which a deeper problem played out? A Quick Recap of the Mechanics In short: banks began issuing home loans to borrowers who genuinely couldn't afford them — known as subprime loans . Investment banks bundled large volumes of these mortgages into a complex derivative called a CDO (Collateralized Debt Obligation) , which credit rating agencies then rated — remarkably, close to 70–80% of these CDOs received the highest possible AAA rating , despite the risky loans underlying them. Insurance companies then introduced CDS ...

  How Do Investment Banks Work? What Are Investment Banks? An Investment Bank is an organization that partners with businesses to help them raise capital — while taking on much of the risk involved in that process itself. That definition will make a lot more sense by the end of this article — let's walk through what investment banks actually do. What Do Investment Banks Do? Say a company wants to raise funds quickly. It can approach an investment bank and ask it to find investors on its behalf. The investment bank goes out and finds suitable investors for the company, and — critically — guarantees both sides of the deal: the company that its shares (or bonds) will sell, and the investors that the company will follow through on its end. In doing so, the investment bank takes on real risk as an active participant in the deal, not just a matchmaker. This makes the investment bank a genuine intermediary between the buyer (investors) and the seller (the company). If either side fails ...

How Do Banks Work? Banks are among the most powerful financial institutions out there — capable of influencing the shape of an entire economy. But have you ever actually wondered how they work? Why do they pay us interest? How is that beneficial for them? And how do banks make money in the first place? Here's a straightforward overview covering all of it. Where Does Bank Interest Actually Come From? Banks collect deposits from ordinary people — money we choose to deposit, either to keep it safe or to earn some interest on it. Banks don't come looking for this money; we're the ones who bring it to them. If you leave your deposit untouched for a year, the bank might pay you, say, 4% interest on it. But where does that interest actually come from? Here's what's happening behind the scenes: banks also issue loans — and that loan money isn't the bank's own money. It's our deposited money, put to work. Banks lend that money out at a higher interest rate — say...

  What Is Fiat Currency? What Is Fiat Currency? Fiat currency is money that has no inherent physical value of its own — its value exists purely because people collectively trust and accept it, backed by government decree rather than a physical commodity like gold or silver. How Did We Get Here? The short version: money evolved from a barter system, to gold and silver coins, to paper receipts representing those coins (an early precursor to banking) — and eventually, those receipts became backed by nothing but collective trust and government authority, rather than any actual gold or silver reserve. → Related: What Is Inflation? What Causes It? (#28) — covers this history in more depth, including an important caveat: historians and economists actually dispute how literally the barter system functioned as money's true precursor, so it's worth treating that part of the story as a popular simplification rather than settled fact. The key idea: paper money is essentially a deri...

  Basics of FMCG: FMCG Stocks What Does FMCG Stand For? FMCG stands for Fast-Moving Consumer Goods. What Kind of Sector Is FMCG? FMCG is one of the largest sectors in the economy. What Do FMCG Companies Make? FMCG companies manufacture relatively inexpensive products — but sell them in very large volumes, which is where the "fast-moving" part of the name comes from. Examples of FMCG Companies FMCG spans categories like food, household goods, and pharmaceuticals. Nestlé is a well-known example of a major FMCG company. How Do FMCG Stocks Perform During Inflation? FMCG stocks tend to hold up comparatively well during periods of high inflation. Even as prices rise, demand for these products stays relatively stable, since they're everyday necessities — people generally can't simply stop buying groceries or household essentials the way they might delay a bigger, non-essential purchase. → Related: How Does a Rise in Inflation Affect the Share Market? (#55) Than...

  How to Become a Stock Broker: Basic Requirements Considering a career as a stock broker? Here's a look at what it typically takes to break into the field. Note: this is based on independent research and reflects general, commonly-cited requirements — it isn't legal or professional guidance. Requirements vary meaningfully by country, so always confirm the specifics with your own country's capital market regulator before pursuing this path. Common Requirements (India, as an Example) Since requirements vary significantly by country, here's a general picture based on India's framework, where the process is fairly well documented: Educational background : at minimum, having passed 12th grade (10+2), though most brokerage firms strongly prefer — and often require — a bachelor's degree in finance, commerce, economics, or a related field. Minimum age : typically 21 years old. Certification exams : candidates generally need to pass relevant certification exams (in I...

  What Do Sponsors Get in Return? Ever wondered why YouTubers, social media influencers, and even bloggers so often promote other companies' products? Or why nearly every show today is "in partnership with" or "sponsored by" some brand? We see company logos on screen, and in sports, players wearing jerseys branded with a sponsor's name. Let's break down what's actually happening. Worth being clear upfront: everyone involved is making a profit — the company, and whoever's promoting their product. Why Do Companies Sponsor Creators? Say a company is relatively new and not yet well known. It might already run billboards and traditional ads, but it wants to build brand awareness faster — so it reaches out to YouTubers, bloggers, and influencers who have a solid audience, specifically one that matches its target audience . "Right target audience" means exactly what it sounds like: a fashion brand, for example, will reach out to creators who...

  Why Is It Important to Be Rich? How Can You Get There? Regardless of someone's background, gender, or interests — whether that's cooking, art, or anything else — most people share a few common desires: respect, independence, adventure, and joy. And while money can't buy happiness outright, it's a powerful tool for building the kind of life that makes happiness more achievable. Today, we'll cover why building wealth matters, and share some real ways to think about generating money consistently, so you're never caught short. Wanting Money Isn't Greed There's a popular saying: "money can't buy happiness — but I'd rather be unhappy in comfort than unhappy without it." It's a bit cynical, but it points at something real. Wanting to achieve financial freedom through hard work isn't greed. Greed is closer to the opposite: earning without willingness to work for it, or spending on things you don't need to impress people you don...

What Is Inflation? What Causes It? (A Brief History of Money) What Is Inflation? Inflation is the economic phenomenon where the value of money decreases over time, as the cost of living rises — meaning the same amount of money buys progressively less than it used to. A Brief History of Money To understand inflation, it helps to understand where money itself came from. This is the popular, commonly-told version of that story — worth noting upfront that economists and anthropologists actually debate how literally accurate parts of it are, particularly the idea that a formal barter system was the direct historical precursor to money everywhere. Some researchers argue early economies more often ran on credit and informal debt tracking rather than literal one-for-one barter. That said, the broader arc — from physical commodities, to coinage, to paper money — captures something real about how monetary systems evolved. The Barter System: the earliest widely-discussed method of exchang...

  What Is GDP (Gross Domestic Product)? How Is It Calculated? What Does GDP Stand For? What Is GDP? GDP stands for Gross Domestic Product — the total value of all goods and services produced within a country over a specific period, typically measured annually. Add up everything produced domestically — goods like cars, bikes, and clothes, alongside services like healthcare, education, and other professional work — and the resulting total is a country's GDP. Only production that happens within that country's borders counts. Why Does GDP Matter? GDP is essentially a measure of how strong an economy is. The higher a country's GDP, the more it has produced in goods and services over that period — generally indicating a stronger economy. GDP affects everyday life in real ways. A shrinking or consistently declining GDP can signal a weakening economy, potentially leading toward a recession or broader financial difficulty — with tangible negative effects on jobs and incomes...

  How Do DPs & Stock Exchanges Earn Money? Sources of Income of These Major Financial Bodies Everyone in the share market shows up with the same basic motive: earning a profit. And that applies to the institutions running the show too — nothing operates for free. It always costs something, whether that's money or time. Depository Participants (DPs) and Stock Exchanges both play a central role in how the share market functions. Ever wondered how they themselves make money? Let's break it down. → Related: What Is the Share Market? (#2) — for more on how DPs and exchanges fit into the bigger picture. How Do DPs Make Money? If you're not familiar with the term: a Depository Participant is what you use to open a trading account — a bank, a broker, or (most commonly today) a trading app. DPs charge brokerage fees on every trade, with different rates for Intraday versus Delivery transactions. Different DPs set different pricing structures, and this fee is their primary in...

What Makes Currencies Weaker or Stronger? Major Factors Affecting a Currency's Value Currencies of different countries hold different values relative to one another. As of mid-2026, for example: $1 (USD) ≈ ₹95.7 €1 (EUR) ≈ ₹110 £1 (GBP) ≈ ₹130 C$1 (CAD) ≈ ₹68.7 (Exchange rates shift daily — treat these as a rough snapshot rather than a fixed reference point.) Ever wondered why currencies are valued so differently — or what would happen if they all became equal overnight? Let's dig into both questions. What Makes Currencies Weaker or Stronger? There are several major factors that determine a currency's value. Let's walk through them. Demand & Supply This is the core factor behind the price of anything that isn't fixed — shares, currencies, and similar assets. When demand for something rises faster than its supply, its price rises. When supply outpaces demand, price falls. Currencies follow the same principle. A quick primer: Export = selling to oth...