Investment Analysis is an umbrella term which includes various types and aspects relating to investing. From scrutinizing the previous returns to making calculations of the future returns, all comes under the process of investment analysis. Each investor has their differentiated goals and thus identifying the investment tool best suited for each of their needs is also a vital aspect of investment analysis. Evaluation of securities, like bonds and stock to calculate their proper valuation comes under this term.  Determining the extent of profitably and risk in an investment and making an informed decision about its suitability to a portfolio requires a competent analysis.

Tom Colton lists the important points of Investor Analysis

While investing in a portfolio, a person spends a considerable amount of his money on it. Thus it is of utmost importance that he should have a proper idea about what to expect from it. Not every investment is suitable for all investors, nor do all of them yield the same percentage of returns. Thus, here is when the process of investment analysis comes in. They assist in determining how a certain investment is expected to perform and if it suits the needs of the investor. These analyses examine the historical investment decisions in order to study their pattern and to avoid any mistakes made in their cases.

Not everyone can be suited to make an investment analysis reports. It takes a deep knowledge about the market, as well as specialized expertise in order to perform these functions. As a highly experienced financial professional, Tom Colton has been dealing with investor analysis for a long time. With the help of his valued knowledge, he lists out a few points which should be listed in an investor analysis. These points are:

  • Investor Objectives: Determining the goals of the investors and understanding his expectations is the very first step of forming an investor analysis. Each investor has their distinguished tolerance for risks and requirements about the revenue. Few may even need the income in a certain time period. The investment options are fashioned in accordance to these needs.
  • Check the Suitability: Even if an investment fulfills all the investor goals, it is not necessary that it is perfectly suited for them. If the investor is not much financially stable then investments having high risks should be avoided.
  • Qualitative approach: A proper qualitative research should be made on each the investments before deciding on any one of them. This research includes the examination of real estate demographics, the history of the business and the trustworthiness of its management, identification of the main competitors of the business, and so on. All these background facts are extremely relevant as it add more contexts to the investment proposal.
  • Performance Estimates: A proper performance estimate should be made so that the investor knows what to exactly expect from his investment. This includes the estimated returns, the period of payback, expected growth rates and information about the tax deductions.

By preparing an investor analysis with the assistance of an expert like Tom Colton, one can ensure in the minimization of their risks and maximization of their returns. They help in identification and selection of the investment plan best suited for you.