Investment Fundamentals is one way to make your money work harder, helping you get more ‘bang for your buck’ to achieve your financial goals. Whether you’re saving for a home, a holiday or your children’s college education, investing can help you achieve those goals and beyond.

All investments carry a degree of risk, but there are many ways to reduce this risk. By diversifying your portfolio with both defensive and growth investments, you can reduce the risk that you will lose money if markets fall, whilst maximising the chance of achieving long term returns.

Understanding Investment Fundamentals

If you are a new investor, or even an experienced trader, you have likely tried a variety of techniques to try and determine which stocks will be winners. Two of the most common are known as fundamental and technical analysis.

Fundamental analysis involves evaluating a company’s business and financial health, along with broader economic indicators to uncover a stock’s intrinsic value. This approach looks behind investor sentiment and company marketing, to examine things like a business’s competitive advantages within its industry, as well as the effectiveness of its management team.

This type of evaluation can also include calculating ratios, such as the debt-to-equity ratio and cash flow statement. This allows investors and analysts to make apples-to-apples comparisons between companies, and decide whether a share is over, under or fairly valued in the market. This can be a time consuming process, but there are numerous resources to help you along your way. These can include online financial platforms, such as Yahoo! Finance and Google Finance; as well as investment research reports produced by brokerage firms.