As per Patrick Dwyer Finanical Advisor, financial Planning is the process of estimating how a business will meet its strategic target and objective. Usually, a company works out a financial plan immediately after the project is conceptualized. The financial plan takes into account each activity, resources, equipment, and raw materials including utility items that are necessary for completion of the project keeping in mind the optimum time schedule.
Financial planning comprises the following aspects:
- Review the business environment
- Confirm the business strategy
- Identify the resources needed and make necessary action to achieve it
- Calculate the capital cost as well as operating cost
- Summaries and review the cost to prepare a budget and financial analysis to determine breakeven point and return on investment, which confirm the achievement of financial objectives.
Investment planning comprises the following aspects:
Investment plantings are financial result or product that provides the opportunity to generate wealth for future livelihood or reinvestment. The investment plan is a very important activity, which helps individuals to select the option of various investments in a disciplined and periodic way into different funds like Mutual Fund, ICICI Prudential etc. Investment in these funds allows individual persons to achieve a future financial goal.
Difference between Financial Planning and Investment Planning
Common people have a concept that Financial Planning and Investment Planning are the similar type of investment, which is not true. While investment plays a vital role in a successful financial plan, it is not at all a plan itself. Even some reputed financial professional becomes confused in differentiating between Financial Planning and Investment Planning in absence of clear conception in both the categories. It is due to the fact that they do not concentrate on the Job titles. They refer to distinct parts of an integrated financial process although two planning is discreet subjects. To achieve the correct financial goal, a concept of an individual must be clear and require deeper thought.
According to Financial theorists, the financial plan is a comprehensive evaluation of the investor’s current and future financial health taking into account currently available financial data to predict future cash flow, asset value, and future likely expenses. Items like savings, budgeting, insurance, investment, taxes, estate planning, and retirement planning are all part of the sound Financial plan. Prudent financial plan changes in line with the changes in your life.
Investment planning deals with the creation of an Investment plan and sticks into it although the investment takes a downward trend. It depends on the capability of an individual to withstand the risk, asset allocation in order to maximize return on investment.
Investment advisors guide their clients and often have an irresponsible mentality when client onboard the process. Patrick Dwyer Finanical Advisor says that since the client is already on board, it gives them the advantage to take the decision without caring to obtain formal clearance from the client before executing the task. It is a great advantage to avail the services from an Investment advisor as they can keep their client calm during market volatility.