Financial Planning vs Investing: What’s the Difference and Why It Matters
When markets become volatile, investments often take centre stage. But true financial planning goes far beyond investments alone. Over the past 30 years, the financial planning profession has shifted from selling products to managing investments to focusing on each client’s unique goals and values.
So, how do investing and financial planning relate—and why is it important to understand the difference?
Understanding Investing
For many people, investing represents the most visible part of financial planning. Focusing on investment returns is natural, especially when markets are turbulent. However, short-term market movements are extremely difficult to predict, and no one has a crystal ball.
What we do know, with a high degree of confidence, is that over time, equities tend to outperform cash. Our investment strategy partners, Albion, highlight this point:
“Using a long-run global stock market dataset, stocks have outperformed cash in over 98% of 20-year rolling periods between February 1955 and September 2024. Over that time, global equities delivered an average real return of 5.6% per year, compared to just 1.2% for cash.”
While there are never guarantees, history suggests the odds are in your favour when you invest for the long term.
Another key to successful investing is diversification—spreading your investments across markets, sectors, and asset classes. This reduces the risk of being overly exposed to any one area and helps deliver a smoother experience over time.
At Ifamax Wealth Management, our investment approach is built on evidence. We don’t try to outsmart the market—we use diversified strategies that tilt towards areas historically shown to deliver strong returns. It’s not about being clever; it’s about helping clients sleep easily at night.
Financial Planning vs Investing
The difference between financial planning and investing comes down to focus.
Investing alone often leads to a DIY approach—appealing on the surface because it may appear cheaper. But it also places all the responsibility on your shoulders: from selecting investments to understanding complex tax rules and adapting your plan over time.
Financial planning, on the other hand, integrates investments within a broader strategy tailored to your life.
It’s about:
Using the most tax-efficient tools for saving and investing
Creating a sustainable retirement income plan
Planning for intergenerational wealth transfer
Adjusting your strategy as life changes
In short, investing is just one element of financial planning. When you focus only on investments, you risk missing the bigger picture—and the true value that financial planning can bring.
Coping with Market Volatility
Market volatility is normal. We can show you charts and historical patterns to support that. But we also understand that volatility creates worry, especially when you’re thinking about your future and your loved ones.
As Warren Buffett famously said:
“Be fearful when others are greedy, and greedy when others are fearful.”
In 2024, Buffett sold $134 billion in equities and held $334 billion in cash. As Armando Gonzalez of Biddata.com explained:
“He’s not trying to time the market’s bottom or chase quick rebounds. He waits for the risk–reward equation to shift decisively in his favour.”
It reminds us that no one can time the market perfectly. However, downturns often present opportunities for those who are prepared.
Financial Well-Being and Peace of Mind
This isn’t a question of financial planning vs. investing. Investing is a vital part of a broader financial plan—one built around your life, goals, and definition of success.
At Ifamax Wealth Management, we call this a “sleep easy strategy.” It’s a long-term, evidence-based approach designed to help you stay focused, even when markets feel uncertain.
We're here to support you if you feel anxious about the future. As Buffett suggests, moments of fear may be the best time to look for opportunity.
If you’re to discuss things further, please don’t hesitate to get in touch.
Risk warning
This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Reference to specific products is made only to help make educational points and does not constitute any form or recommendation or advice. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.