In fact, financial management focuses on life planning, considering accumulating finances and ensuring wealth.
Investment, on the other hand, is to conduct reasonable monetary operations under the assumption of necessary risks in order to obtain high returns.
In other words, financial management pays more attention to financial management through a series of purposeful and conscious planning, so as to maximize the income of personal and family assets.
★ What is financial management?
When people talk about financial management, they think of either investing or making money. In fact, the scope of financial management is very wide. Financial management is to manage the wealth of a lifetime, that is, the cash flow and risk management of an individual's life. Contains the following meanings:
Financial management is to manage the wealth for a lifetime, not to solve the problem of urgent need for money.
Financial management is cash flow management. Everyone needs to use money (cash outflow) and earn money to generate cash inflow at birth. Therefore, no matter whether you have money now or not, everyone needs to manage money.
Financial management also includes risk management. Because more flows in the future are uncertain, including personal risk, property risk and market risk, which will affect cash inflow (income interruption risk) or cash outflow (cost increase risk).
"In fact, investment is only one aspect of financial management, but it does not mean financial management." Zhao Yuan believes that the ultimate goal of investment is to maximize income, and financial management refers to the optimal allocation of assets, that is, it is necessary to comprehensively consider various factors such as assets and liabilities, life financial planning, risk preference and so on of different investors, balance the rate of return and risk, and optimize the investment portfolio. "Of course, some financial plans also include investment portfolios. Through these investment channels, we can increase our income and finally achieve long-term financial goals."
"In fact, financial management is not concerned with how much money should be invested, but whether these investments should be made in personal financial planning or where they should be invested, because investment must obey the overall situation of financial management." Zhao Yuan said that from the development of wealth management market, wealth management and investment have different characteristics in many aspects.
The first is different goals. Generally speaking, investment is to put money into a certain channel or a certain product to achieve value-added, value-preserved and beyond value. Its purpose is to obtain profits, focusing on the liquidity and rate of return of funds. Financial management is not to make money, but to help people arrange their income and expenditure more reasonably, so as to achieve financial security and worry-free life, rather than simply pursuing the preservation of assets.
Secondly, the decision-making process is different. In the design and implementation of financial planning, we should not only consider the factors of market environment, but also consider various factors of individuals and families, including life goals, financial needs, assets and liabilities, income and expenditure, and even consider personal personality characteristics, risk preferences, investment characteristics, health status, etc. In the investment decision, it is based on the judgment and grasp of market trends, mainly considering the rate of return, and rarely considering other personal needs.
Moreover, the results are different. Generally speaking, the result of investment is to gain income and realize the preservation and appreciation of assets, but it may also suffer certain losses because of risks. Financial management is to make our future life richer, our quality of life and our families healthier and happier under the current assets and income.
The fourth is the different coverage. Specifically, the investment channels of individuals and families mainly include all kinds of assets bought and sold in the financial market, such as deposits, bonds, stocks, funds, foreign exchange and futures, as well as assets bought and sold in the physical market, such as real estate, gold and silver jewelry, stamps, antiques, or industrial investments, such as personal shops and small businesses. The content of financial management is much richer, including all aspects of personal and family income and expenditure.
The difference between investment and financial management
Talking about the difference between financial management and investment, Wang Bingsen, managing director of Beijing Taihe Chen Fu Financial Consulting Co., Ltd. explained that financial management is actually a strategy, which focuses on the layout of assets and realizes the stable development of family finance through the complementarity of various assets; Investment is the application of strategy, the concrete implementation of financial planning, and only a part of financial management.
If you compare financial management to travel, you first need to know where you are (current economic situation), where you want to go (future financial management goals) and how to get to your destination (means and steps to achieve your goals). "Investment is only a means to achieve financial goals, and financial management is a systematic plan."