Financial Planning Vs Investment Planning

What Is Financial Planning?

What Is Investment Planning?

What Is the Difference Between Financial Planning and Investment Planning?

While discussing investment and financial planning, let’s look at some of the crucial parameters on the basis of which these both are differentiated.


Financial Planning

Investment Planning

Area of Focus

It has a broader framework and requires details like how to plan for short-term and long-term goals, how much funds are required at the time of retirement, etc.

It is the pathway to your financial planning, thus involving detailing what should be your asset returns, diversification, etc.


As it involves a more long-term perspective, it plans your retirement and child’s future education, etc.

It has a shorter and smarter perspective and involves information like how equity funds, and debt funds will perform in the next few years.


It helps in reducing your overall debt by focusing on products that minimise your risk, like health insurance, asset insurance, etc.

It focuses more on asset classes like debt, equity, gold, etc. Thus, it tweaks your assets in a way to help predictably meet your financial goals.


It does not require regular monitoring. Once made, its sanctity remains constant for years.

It needs to be reviewed constantly, at least once a year and accordingly, changes are updated.


Rebalancing is only required when your financial situation undergoes a major change or when there is a major structural change in the asset class returns.

Rebalancing is required under various conditions like a shift in asset values, the underperformance of an asset class, etc.


It is unique for an individual and cannot be replicated for anyone else.

It can be quantified, and there will be a fine set of possibilities for other individuals.


It is more detailed and static in nature.

These are subjected to market risks, thus, highly volatile in nature.

How Financial Planning Works?

How Does Investment Planning Work?

FAQs about Financial and Investment Planning

What are the three major components of the financial planning process?

The three major financial planning components are Budgeting, Liquidity Management, and Insurance.

Is a financial planner the same as an investment advisor?

Financial planners focus on real estate planning, retirement planning, and more, while investment advisors focus on helping you make investments. So, whether you want to grow your wealth or invest in mutual funds or stocks, you can always consider working with a financial advisor.

Are financing and investment decisions independent?

The investment decision is completely independent of the financing decision. But the financing decision somehow depends upon your investment decision.