If you watch commercial TV, you will see literally dozens of ads for financial services and hear words like “wealth management” and “financial planning” bandied about interchangeably. If you are at a point of making serious financial decisions, however, it is worth recognizing the distinctions between these terms. Here are some basic definitions intended to simplify the discussion and allow you to focus on your specific needs.
What Is Estate Planning?
Planning out the dispensation of your estate is really your ultimate concern. Clearly, like most individuals, you are not simply trying to accumulate funds to spend in your lifetime. You intend for your accomplishments and your acquisitions to pass on to others for further use after you are gone. Though this is your final act, you cannot wait until the end to plan it out. Also, it is best to have some wise counsel from professionals, such as Estate Planning Somerville NJ.
What Is Financial Planning?
In the simplest terms, financial planning is a step above budgeting. Beyond merely making ends meet, you begin setting portions of income aside for savings as well as purchases such as real estate that appreciate in value. The key element of this aspect of planning is balancing your income against your needs and your investments. You will want to set apart a “rainy day” fund for large, unexpected expenses while at the same time cutting back on unnecessary expenditures.
What is Wealth Management?
With good fortune, you will attain a point at which managing your finances becomes a matter of maximizing the gains from your investments. You will want to divest your financial portfolio to ensure that you have ample funds for all your retirement activities, while at the same time preserving and enhancing all your assets.
Each of these concepts will play an important role at various points of your financial voyage.