Personal financial planning is the development and implementation of comprehensive, coordinated plans to achieve an individual's overall financial goals. The term private wealth management is also increasingly used in this process, especially when it comes to larger investment ports and real estate.
Most people use a variety of financial instruments to achieve their goals. Therefore, common stocks, bonds, mutual funds, insurance, fixed and variable annuities, money market accounts, certificates of deposit, savings accounts, individual retirement accounts, qualified retirement plans and other employee benefits, personal trusts and real estate, etc. It is an element of a fully understood financial plan.
Participation in the planning process is also the development of personal financial policies to help guide individuals' financial operations. An example of such an investment policy is to determine the percentage of investment bonds [or other fixed dollar securities] in the portfolio and the percentage of common stock [or other equity investments]. Another example of life insurance is that consumers may want to purchase life insurance, which is primarily cash value, or decide to purchase most of the term life insurance and put the savings amount elsewhere. Unfortunately, many people did not follow a consistent policy when making these decisions.
In financial planning, people consciously or unconsciously make assumptions about the current economic environment and what they think of the economy's perception of the future. For example, a widely held view is that the US economy usually experiences real long-term growth in an indefinite future, accompanied by at least some price increases. On the other hand, others may worry that the economic situation will change at some point, so they may plan their finances accordingly.
Orignal From: What is personal financial planning?
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