Understanding Investment Banking

Investment banking differs markedly from retail banking. Bank branches where you deposit paychecks, checks and cash are part of the retail banking world. Retail banks also known as commercial banks loan money for mortgages and may also offers credit cards to consumers. Commercial banks also offer certificates of deposits, savings accounts and checking accounts. The main way that retail banks function is they take money from an individual or business and then loan a portion of that money to someone else in the form of loans or credit. The retail bank makes money off of interest charged to people who have taken loans or use credit.

Investment banks play a very different role in the economy. To start, most investment banks do not have branches that will accept deposits of cash or checks like commercial banks do. You won’t find certificates of deposit or savings account at investment banks either. Investment banks instead invest money into stocks, commodities such as corn, oil, precious metals and cotton. They buy and sell stocks, bonds and commodities and try to make a profit off these items. Investment banks are actively involved in trading goods and financial derivatives. Commercial banks typically do not do this.

Another important job that investment banks do, is raising money for companies by determining the value of company stock, and then actually trying to sell the stocks on the markets. Investment banks often charge a fee for this service or they are paid on a commission basis for every share of stock sold. Helping companies acquire and merge with other firms is another job that investment banks do.

Investment banking can be a very lucrative field with big payoffs. Martin Lustgarten, the founder of investment banking firm Lustgarten Martin has a made fortune in the field of investment banking. Mr. Lustgarten approaches investments with a very cautious eye and compares the possibility of a payoff when the possibility of losing money before making an investment. This approach has minimized losses for Lustgarten Martin and has kept his firm profitable.

Investment banker Martin Lustgarten has a great deal of knowledge of the Central, South and North American markets. His insight has helped him spot profitable investments and avoid many pitfalls that abound in developing countries. Mr. Lustgarten resides with his family in Florida. His firm is also located in Florida, outside of Jacksonville.