Investment Analysis

AAA

DEFINITION of '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.


INVESTOPEDIA EXPLAINS '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. Random Factor Analysis

    A statistical analysis performed to determine the origin of random ...
  2. Risk Management

    The process of identification, analysis and either acceptance ...
  3. Advisor Account

    A type of investment account where an investment advisor works ...
  4. Advisor

    1. The person or company responsible for making investments on ...
  5. Fund Manager

    The person(s) resposible for implementing a fund's investing ...
  6. Investment Advisor

    As defined by the Investment Advisors Act of 1940, any person ...
Related Articles
  1. Budgeting

    Find The Right Financial Advisor

    Learn how to weed out those who are just out to make a quick buck.
  2. Options & Futures

    Shopping For A Financial Advisor

    Finding your perfect advisor is as simple as shopping for a car. Read on to learn more.
  3. Active Trading Fundamentals

    Tips For Controlling Investment Losses

    A profit/loss plan helps investors recognize mistakes and invest logically, rather than emotionally.
  4. Active Trading

    Peak-and-Trough Analysis

    Prices never move in straight lines, so it's time to learn about this powerful trend-following technique.
  5. Investing

    Using Technical Analysis In The Gold Markets

    The quest for this shiny commodity has made millionaires of paupers and, on the flip side, ruined many an investor.
  6. Retirement

    Why Financial Advisors Disagree

    Financial advisors sometimes offer conflicting opinions that can be confusing for many investors.
  7. Options & Futures

    Having A Plan: The Basis Of Success

    It ensures that you have a realistic outlook, and a solid strategy. We show you why and how.
  8. Personal Finance

    Testing 3 Types Of Analysts

    Different clients require different research reports. Which type of analyst do you need?
  9. Mutual Funds & ETFs

    Why Mutual Funds Lose Their Five-Star Ratings?

    Ratings help people feel confident about their decision before purchasing. Morningstar’s rating system helps people to find and invest in mutual funds.
  10. Mutual Funds & ETFs

    ETFs Characteristics for Short-Term Trading

    Not all ETFs fit the short-term trading scenario. Investopedia tells you the main characteristics to shortlist ETFs for the best trading fit.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center