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What Are The Steps Involve In Investment Analysis?

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Muhammad Abdullah786 Profile
The assessment of capital investment plan should be come up to in the following ways. By recognize potentially commercial speculation substitute, by assemble pertinent data on capital lay out, cost, and profits, using appropriates method to investigate the data, and by making a decision whether to accept or reject the investment or selecting the top position among equally elite projects.
The victorious economic manager must be frequently alert for potentially commercial speculation substitute. As a minimum, adequate new investment should be assume to maintain or increase efficiency and to produce a level of income that will meet the needs or goals of the family. Beyond this successful, growing business relies on a selection of new projects that can be applied to expand the operation. Regardless of specific method used, capital investment psychoanalysis requires exact data on costs and returns. Normally, the primary investment outlay cans be estimated with reasonable exactness. However, future costs and benefits and the predictable useful life of the investment are much more difficult to educated guess. The strength of the results will depend upon the quality of input information. Thus every effort must be made to obtain realistic estimates of cost and benefits.
At last in investment psychoanalysis is to select the substitute based on the preceding assessment and execute the project. Although this phase would appear to be clear-cut, assemble the project.
Robert Lamp Profile
Robert Lamp answered

Investment Process: Step # 1. Investment Policy:

The first stage determines and involves personal financial affairs and objectives before making investments. It may also be called preparation of the investment policy stage.

The investor has to see that he should be able to create an emergency fund, an element of liquidity and quick convertibility of securities into cash. This stage may, therefore; be considered appropriate for identifying investment assets and considering the various features of investments.

Investment Process: Step # 2. Investment Analysis:

When a individual has arranged a logical order of the types of investments that he requires on his portfolio, the next step is to analyse the securities available for investment. He must make a comparative analysis of the type of industry, kind of security and fixed vs. Variable securities. The primary concerns at this stage would be to form beliefs regarding future behaviour or prices and stocks, the expected returns and associated risk.

Investment Process: Step # 3. Valuation of Securities:

The third step is perhaps the most important consideration of the valuation of investments. Investment value, in general, is taken to be the present worth to the owners of future benefits from investments. The investor has to bear in mind the value of these investments.

An appropriate set of weights have to be applied with the use of forecasted benefits to estimate the value of the investment assets. Comparison of the value with the current market price of the asset allows a determination of the relative attractiveness of the asset. Each asset must be valued on its individual merit. Finally, the portfolio should be constructed.

Investment Process: Step # 4. Portfolio Construction:

Under features of an investment programme, portfolio construction requires a knowledge of the different aspects of securities. These are briefly recapitulated here, consisting of safety and growth of principal, liquidity of assets after taking into account the stage involving investment timing, selection of investment, allocation of savings to different investments

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