When it comes to money management, having a plan is key to being as successful as possible. But what kind of plan do you need? Today's consumers have a variety of options for wealth management, but two of the most common are a financial plan and an investment plan.
Which is right for you? Here's what you need to know.
What Is an Investment Plan?
An investment plan focuses on managing your investments alone. The wealth manager will look at your current investments in terms of risk tolerance, tax strategy, diversification, and returns. They will discuss your investment goals, such as how much you estimate needing in retirement. Then, they can help you make adjustments or select products that will achieve those goals while balancing other factors.
Who Needs an Investment Plan?
Many ordinary investors aren't very familiar with the world of investments. As more and more Americans put their retirement savings into better-performing investments, in particular, many may not know much about important things like diversification, risk tolerance, and rebalancing. If you count yourself as one of these, professional assistance is vital.
Even if you do know something about investments, you may not have the time to actively manage yours. Outsourcing this work means you don't miss out on better rates of return just because you're busy with family or work.
What Is a Financial Plan?
A financial plan is a more holistic approach. Rather than simply analyzing and adjusting investment assets, it looks at the overall financial situation and goals of the client. The financial plan certainly includes the important element of your portfolio, but it also looks at tax strategies, budgeting, personal savings, use of debt, and estate planning.
Who Needs a Financial Plan?
You may need a financial plan if you struggle with more than one aspect of managing your money. Do you hate to budget? Consistently spend too much? Have you put off estate planning? Do you have sinking funds for your home? Need to catch up on saving for college or retirement? A financial plan can help.
Because of its far-reaching nature, financial planning calls for more time, effort, and consultation. You may need to check in more often than for an investment plan alone, and you may have to do more homework to achieve its goals.
Where Should You Start?
Could you use help getting the most out of your assets? Or do you need help in several areas to improve your financial life? No matter which plan is right for you, a financial planner can help. Contact a financial planner for more information on financial investments.