What Are the Different Types of Financial Planning Strategies?

Financial planning (Financial Planning) refers to taxpayers' activities to reduce taxation through business and private practice arrangements. Financial planning is based on the needs of individuals (family) or the company, to achieve smooth cash flow and enhance the ability to create wealth.

financial plan

Financial planning (Financial Planning) is based on the needs of individuals (families) or companies, so that the process of finance from health to security, from security to autonomy, from autonomy to freedom, and to achieve smooth cash flow and wealth creation in the process Improvement of ability.

Financial planning is often translated into financial management in China, or

What is the real meaning

Financial planning is not

Misunderstanding of financial planning

In China, there are very few people who specially hire financial consultants to do financial planning for themselves. Even if they have a special financial consultant, they may not trust their "small coffers". Therefore, many personal financial planning are modeled after the media or other The information published in the channels shall be formulated by reference. A thorough financial plan is based on an analysis of the financial situation. Financial status refers to a person's income and expenditure. The huge individual differences determine that everyone's financial situation cannot be 100% the same, so there is no ready-made or standard financial plan suitable for a specific group of people.

For example, category A people have a stable wage income and stable living expenses every month, and they can also deposit a fixed proportion of their wages in a bank; category B people have very volatile income sources due to their professional relationships, and their expenditure accounts for The proportion of income is also very high; the economic source of C-type people is not guaranteed, and the amount of expenditure is relatively fixed; the D-type people inherit a lot of wealth from their previous generation ... The financial planning of these people cannot be similar. Therefore, referring to other people's plans to manage your own finances is a bit like a blind person trying to figure out how to get the expected benefits.

Financial planning fuzzy concept

We must distinguish between the two concepts of "affordable" and "willing to bear". "Affordable" refers to the degree of loss that individual investors can afford if financial conditions permit, based on scientific analysis and calculations. "Be willing to bear" does not require scientific analysis and calculation, which is mainly related to personal psychological factors. Some investors have psychological reasons, such as eager to get rich quickly, or overly worried about the loss of their originally accumulated wealth, while overestimating or underestimating their risk tolerance. The asset portfolio of investors eager to get rich may be overly inclined to high-risk securities such as stocks and junk bonds, and once the market conditions are unfavorable, they will suffer unbearable losses; the portfolio of overly conservative investors may be overly inclined to low Risky fixed-income securities will lose the opportunity for rapid appreciation of assets when the capital market is developing rapidly, and may affect their future large-scale expenditure plans and retirement plans.

Misaligned financial planning goals

"At the end of this year, we guarantee a 30% return, and our total assets will exceed one million." It is not a joke that the income of similar idiots is expected, and many people have similar rhetoric when the stock market improved in 2007. "What is the investment income that I require? What is the investment income that a financial plan can achieve?" This is the core concern of all investors and a very important part of a financial plan. It is important to note that there is a difference between what investors want to achieve and what they can achieve.

Many investors have a common feature, that is, they want to find a product that provides high yields and low risks, but when asked about the yield target, few people can provide the exact number. The higher the answer, the better. This is an example of a serious disconnect between income and risk appetite. In this world, there are no free lunches and there are almost no high-yield, low-risk products.

After investors have determined their risk tolerance, they will look for financial instruments in the market based on the level of risk. If we assume that the price of the financial instrument is basically reasonable and basically reflects its degree of risk, then the rate of return of the financial instrument will be a relatively stable value. What we need to do is find a balance between the expected return and the return that the financial plan can achieve. The basic principle is simple: high risk, high return. If you feel that the rate of return that your financial plan can achieve is consistent with your risk appetite, then please forget about ideas such as "higher is better".