Financial planning and mutual funds

A financial plan is one of the most important documents that everyone must have. The reason for the same is that it shows what is your current financial position, what are the goals that you wish to achieve and how you can reach your desired financial status. Financial planning not only involves just jotting down your goals and investing for achieving those goals, but it is much more than that. Apart from investments it also involves risk management and insurance planning, tax planning, estate and succession planning, etc. It does not just involve suggestions for investments, but also gives an idea about your cash management issues, debt management issues, etc. So it is important for an individual to have his financial plan in place.
 
People usually relate financial planning with mutual funds and insurance. But in reality, mutual funds and insurance are just products which are used to attain something that is defined in the financial plan. For example, if you wish to invest for your child’s education or for your retirement, mutual funds are suggested as an investment vehicle.
 
So it is very important to know and understand that only investing in mutual funds or investing in mutual funds for any of your financial goals doesn’t mean that you have done financial planning or have a financial plan in place. Financial planning is an in-depth exercise which involves not just your money but also your time. So stay away from agents or representatives who call themselves as financial planners. It is very important to check their background, qualification, experience and the services that they are offering.