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Is an Investment Plan the Same as a Financial Plan?

You've got a plan for your investments, but what about your other financial responsibilities?

Are you confident in how you manage debt or insurance? What about how you decide how much money to put away for your children’s education or retirement?

Financial planning is a way to answer these questions and bring all these pieces together.

Key differences between an investment plan and a financial plan

Many people assume that their investment plan is a financial plan, but that’s not the case. An investment plan ensures you can meet your short- and long-term goals such as retirement, buying a home, or effectively using the proceeds from selling your business. It involves balancing your needs with your risk tolerance (asset allocation) and diversification.

A thorough financial plan focuses on your whole financial picture, including:

  • Current cash flow and whether your savings are placed in an efficient vehicle to reach your upcoming goals (home, retirement, business venture, etc.).
  • Comprehensive insurance review to make sure your current coverage meets your needs.
  • Tax planning can help you manage your tax bill efficiently and keep up with changes in tax law.
  • Estate planning can help you protect your assets and pass them to your heirs or beneficiaries in an appropriate manner.

Financial planning also informs your investment strategy. A professional plan typically includes analyzing your investments and stress-testing your portfolio to see if your investments truly fit your risk appetite and can meet your particular goals.

Ideally, your financial plan should provide greater confidence in your finances, your investments, and your future.

Curious about how financial planning can help at different stages of your life? Click here to find out more about our approach to financial planning or click the button below.
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