Wall Street Mentors – 3 Step Investing Process

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.