A Financial Plan or Investing – which should come first?

Financial plan with nest

When looking at your financial health holistically, which should come first — investment management or a financial plan?

Most people tend to think that investing is the more critical side of the equation. After all, if you’re making money, then what better way to grow wealth than to ensure your money is making you more money?

And while we agree, investment management is a crucial component of building wealth, you just can’t start there. Just as you can’t worry about the flooring or the paint color of your home if you haven’t first laid the foundation. 

We’ve all heard the stories of celebrities who made massive amounts of money, but still ended up going bankrupt, or lottery winners who had lost it all within a few years

These are cautionary tales to anyone who wants to both build and keep wealth. It doesn’t matter how much money you have, if you don’t have a plan for how to manage it. 

If you don’t necessarily connect MC Hammer’s or those lottery-winners’ mistakes, let’s talk about someone a little closer to home. 

*Warning: this post contains mixed-metaphors and several different analogies. Proceed at your own risk. 


A financial plan as an afterthought

Sam has done very well for himself lately. He learned the ropes in the stock market, and in recent years has made a great deal of money day-trading. His start-up capital doubled, then tripled, and so on. Eventually he found himself in a position where he was looking at a very early retirement followed by a quite comfortable financial situation. 

Sam focused on day-trading, and that strategy worked for him to not just meet his financial goals but blow past them. And as they say, if it ain’t broke, don’t fix it, right?

Well, what Sam hadn’t realized was that he was navigating a ship along an ocean current with tail winds pushing him on. When the conditions are so favorable, it’s easy to make great progress and feel that it’s all due to your own skill. And of course, who needs a plan when they’re so successful without one?

In 2022 the winds changed, and the waters got rough. Not just for Sam, but for everyone. And when the markets plummeted, so did the wealth that Sam had built for himself. 

When Sam came to us, he was down to a third of the money he’d made and desperate to build it back up. 

He came to NEST seeking investment management services. Investing was how he made his money, and it was how he planned to recover from his losses. 

But what he was really missing were clear goals and a comprehensive financial plan. He’d started laying that lovely Venetian tile down on a foundation of dirt, and when the rains came, all he could do was watch it wash away. 


Why is financial planning so important?

To illustrate why you need a financial planning foundation before you worry about investing, let’s use a sports analogy. 

Say you’re the owner of the Dallas Cowboys. The draft has just ended, and you’ve amassed some of the best talent out there for your team. Each player has honed his skill and at the start of the season is at the top of his game. 

The first game is about to begin. The players are looking at you expectantly. You look at them and smile, a vague feeling that you’ve missed something. You brush the thought away, confident that these guys know what they’re doing. 

“Good luck out there, guys. Go get ‘em!”

The players glance at each other before taking their places on the field. The game begins, and you sit back to watch your all-star ensemble wipe the field with the other team. 

The game ends 49-7. Turns out the other team did the wiping. During the post-game meet in the locker room, you ask what the hell happened out there.

Your quarterback throws down his helmet. “What do you expect? We have no coach! No plays! No plan!”

You see, it doesn’t matter how fast you can run or how far you can throw, if you don’t have a strategy, you won’t be successful.

A financial plan is that strategy. When you have a comprehensive one in place, you can be sure that all your players (investments) will be working together to move you toward your financial goals.


Is financial planning for you?

Whether you’re like Sam and have done really well these past few years only to have some recent losses, you’re well on your way to your retirement goals, or you’re just getting started, financial planning is for you.  

Financial planning with NEST is comprehensive. We leave no stone unturned, and when you sit down with Gloria and Dan, they’ll look at every contributor to your financial health. 

They look at:

  • Life goals
  • Retirement strategy
  • Planning for dependents
  • Cash flow
  • Assets
  • Expenses
  • Debt
  • Estate planning
  • Insurance coverage


At first glance, some of these categories might seem only loosely connected to that stock market portfolio you’re trying to grow. Much like the underground plumbing has little bearing on the housewarming party you imagine hosting in your dream house. But as unglamorous as it can seem, if the plumbing doesn’t work, let’s just say your party won’t go well. 

Financial planning can help you decide how to invest your funds to meet your goals. It can help you strategize how you’ll save money to ensure you’re on the most efficient route, and you’re saving with intention and purpose. Having a financial plan can ensure that, should the unthinkable happen, the people that depend on you will be cared for. 

Financial planning can even help you plan for living life now — getting the car you want, taking that dream vacation, putting your kids through college — without sacrificing progress toward your long-term goals. 

And finally, having a financial plan in place can help you actually set those goals and design a plan backwards from there. Your investments should align with your goals, and not the other way around. 


Investing or a financial plan?

Okay, get ready for yet another analogy. 

Take the brown bear. One of the most powerful and intimidating forces in the animal world, and yet, still subject to the changing seasons. In the spring and summer, the bear spends its time grazing, foraging, and hunting. It takes advantage of nature’s bountiful supply in preparation for the lean times to come. 

When fall approaches, the bear packs on the last few calories available before its winter hibernation. There, it rests for the winter in one of nature’s most efficient energy preservation techniques. It knows when to feast and when to rest. 

Fortunately for the bear, nature has a plan for how it can best manage its resources. Unfortunately for us, when it comes to our own resources, humans are on our own.

Those who have thrived in the “summer” days of the stock market might be under the assumption that things will always be this way. And when winter inevitably comes, they’re unprepared. But you don’t have to be. 

Winter is here. Markets are down in bonds and equities — two of the most popular ones. And when winter comes, the pros act accordingly. Sean looks to up-to-date macroeconomic data to position our portfolios, ensuring that we conserve through the lean months, so we can thrive come spring. 

But just because it’s winter doesn’t mean there isn’t work to do. Growth might slow at this time, but we are still working to ensure that ALL systems are optimized. We are minimizing loss, finding opportunities for steady growth in other asset classes, and taking the time to examine every aspect of our clients’ financial health. Through this, we can ensure that in every season, our clients are on track for their goals, both short and long term. 

So, even when the market slows, threatening a recession, there is work to be done to ensure that you’re always moving forward. During the off-season, our team watches tape, learns plays, conditions, and strategizes. 

And at the start of the season, we’re ready to win


Make a plan with NEST

If you’d like to get started with the important process of financial planning for your future, why not schedule a no-obligation call with us? And if you already have a financial plan, but you’d like to revisit it to make sure you’re still on track, reach out to us at info@nestfinancial.net. We’ve been at this for nearly 30 years, and our team has the expertise to help you set and achieve your financial goals.


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DISCLAIMER: We are legally obligated to remind you that the information and opinions shared in this article are for educational purposes only and are not financial planning or investment advice. For guidance about your unique goals, drop us a line at info@nestfinancial.net.

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  1. […] Having a realistic understanding of what your new cost of living will be can help you not only make informed decisions as you divide assets, but also make important adjustments to your long-term financial plan. […]

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