Investment Analysis

What is an 'Investment Analysis'

  1. The study of how an investment is likely to perform and how suitable it is for a given investor. Investment analysis is key to any sound portfolio-management strategy. Investors not comfortable doing their own investment analysis can seek professional advice from a financial advisor.


  2. An analysis of past investment decisions. An investment analysis is a look back at previous investment decisions and the thought process of making the investment decision. Key factors should include entry price, expected time horizon, and reasons for making the decision at the time.


BREAKING DOWN 'Investment Analysis'

  1. For example, in conducting an investment analysis of a mutual fund, the investor would look at factors such as how the fund has performed compared to its benchmark. The investor could also compare performed to similar funds, its expense ratio, management stability, sector weighting, style and asset allocation. Investment goals should always be considered when analyzing an investment; one size does not always fit all, and highest returns regardless of risk are not always the goal.



  2. For any beginner investor, investment analysis is essential. Looking back at past decisions and analyzing the mistakes and successes will help fine-tune strategies. Many investors don't even document why they made an investment let alone analyze why they were wrong or right. You could make a proper decision, extraordinary events could lose you money, and if you didn't analyze it, you would shy away from making the same decision.
RELATED TERMS
  1. Stock Analysis

    Stock analysis is a term that refers to the evaluation of a particular ...
  2. Capital Investment Factors

    Factors affecting the decisions surrounding capital investment ...
  3. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  4. Decision Analysis - DA

    A systematic, quantitative and visual approach to addressing ...
  5. Managed Money

    A means of investment where the investor, rather than buying ...
  6. Investment Ideas

    Specific views, plans or ideas on ways to invest money effectively. ...
Related Articles
  1. Managing Wealth

    Ten Worst Mistakes Beginner Investors Make

    Here are the ten worst mistakes beginning investors make.
  2. Investing

    Explaining Financial Analysis

    Financial analysis is a general term that refers to using financial data to make business and investment decisions.
  3. Investing

    Where to Invest Your Money? 10 Steps to Financial Success

    Learn where to invest your money ten steps. Included is how to develop a proper investment plan, different investment products and brokerage options.
  4. Trading

    Invest Like A Pro

    By following the strategies of the pros, even a beginner can learn to invest like an expert.
  5. Financial Advisor

    5 Questions First Time Investors Should Ask in 2016

    Learn five of the most important questions you need to ask if you are a new investor planning on starting an investment program in 2016.
  6. Managing Wealth

    Teaching Financial Literacy To Teens: Investing

    Many teens are interested in learning about investing, including investment types, risk management and fundamental and technical analysis.
  7. Financial Advisor

    How to Know When to Pass on an Investment

    Knowing what to invest in is important, but knowing what not to invest in is equally important. Here's how to decide when to walk away.
  8. Managing Wealth

    7 Investing Mistakes And How To Avoid Them

    No investor is flawless. Here are some common investing fallacies and a step-by-step guide on how to avoid them.
  9. Trading

    Removing The Barriers To Successful Investing

    Learn how to stop using emotion and bad habits to make your stock picks.
  10. Trading

    Want To Trade Stocks In College? 5 Tips To Start

    Investing while in college can be challenging. Here are 5 tips to help student investors make the most of their college years.
RELATED FAQS
  1. Why should I have an investment policy statement?

    I heard someone at my office say how large pension funds use investment policy statements. He said small investors can u... Read Answer >>
  2. I'm almost 49, just lost my job and need a nest egg. Would it be a huge risk to play ...

  3. What is the difference between capital investment decision and current asset decision?

    Learn how capital investment decisions are long-term funding decisions, while current asset decisions are short-term funding ... Read Answer >>
  4. What is the difference between risk and opportunity cost?

    Learn the subtle differences between the concepts of risk and opportunity cost as well as how they impact your investment ... Read Answer >>
  5. How is the ability to perform Activities of Daily Living (ADL) measured?

    Find out how to apply sensitivity analysis to your investment decisions, why sensitivity analysis might be useful and what ... Read Answer >>
  6. Are professionals, such as financial planners and brokers, liable for the advice ...

    In the U.S., the Securities and Exchange Commission (SEC) does its best to protect investors from being cheated. To do so, ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center