It is generally believed so. We compare investment to battlefield action, and then financial management is strategic planning. Financial management is broader than investment, and investment is higher than financial management in professional knowledge. Specifically, there are at least the following differences between them:
1, with different targets; The purpose of investment is to maximize profits. It pays attention to the rate of return and gives consideration to the liquidity of assets (that is, whether it can be realized in time when it is turned into cash). The purpose of financial management is to arrange the future income and expenditure reasonably, and ensure the future financial security and worry-free life of individuals and families, rather than simply making money or even not considering making money at all.
2. Different decision-making basis; Investment decisions are based on personal judgment and a grasp of market trends. In this process, the most important thing to consider is the rate of return, and other aspects are rarely considered. In addition to market factors, the decision-making basis of financial management also focuses on personal or family life goals, financial requirements, assets and liabilities, income and expenditure, as well as family members' personality characteristics, risk preferences, investment characteristics, health status and other factors.
3. Different results; The result of investment is profit or loss. Although everyone wants to make a profit, that is, to preserve and increase the value of assets, they will also lose money or even lose money because of unpredictable risks. The result of financial management is whether life will get better or worse in the future. Everyone's financial goal is to make family life richer and more quality, and family members healthier and happier, but it may also lead to a decline in the quality of life due to improper financial planning and arrangement, but this situation is rare.
4. Different scope; The investment scope includes savings, bonds, stocks, funds, foreign exchange, futures and precious metals investment. In the investment of financial assets; Physical assets investment includes real estate, gold, silver, jewelry, collection and other investments, while industrial investment includes small enterprises, small factories, online stores, intellectual property rights, foreign investment and so on. In addition to investment, the scope of financial management also includes other aspects of family income and expenditure, such as insurance. Although financial planning will also consider increasing income through investment to achieve long-term financial goals, in the final analysis, the foothold is still in asset allocation, from the personality and income of family members, as well as the economic environment, savings, cash on hand, investment, insurance and other aspects of the whole family, in order to pursue steady financial growth.
To sum up, the differences between investment and financial management are roughly as follows; Investment can be divided into two categories: personal and family investment, enterprise or government investment. Here, it is mainly personal investment or family investment, which corresponds to personal or family financial management. In essence, financial management should not focus on how much money to invest, nor whether to invest, but on where these funds are in your personal and family financial planning. In the final analysis, everyone needs financial management, but not everyone needs investment. This is not only about whether you have spare money to invest, but also about whether you know the market environment and have the ability to take risks. Therefore, investment must be subordinate to the overall situation of managing money.
Of course, it is not to say that investment is dispensable, but to emphasize that investment pays more attention to the rate of return and asset liquidity. There are still essential differences between the two. Investment and financial management are not the same concept, but they are still very different. Every family needs financial management, but it doesn't necessarily need investment. This is based on whether the family has spare money to invest, mainly on the judgment ability and risk tolerance of the market.