Yielding Wealth | Personal Finance

Investing: Fundamental Analysis

by miranda on October 17th, 2007

When it comes to investing, it is a good idea to determine what sort of analysis you will use in order to decide what to buy, hold and sell. Discipline is a key to successful investing. There are two main types of analysis: fundamental and technical. Each has their merits. Today we will look at fundamental analysis.

Fundamental analysis

This is a type of analysis in which you look at the fundamentals of a stock, index, fund, REIT, bond, currency or commodity. No matter what you are looking at, you study the underlying factors that affect whatever it is you are investing in. In the case of a stock, you would look at the company. Is the management competent? How is the cash flow? Is there room for future growth? If the answers are positive, this a company with solid fundamentals that could make a good investment choice.

Fundamental analysis works well for investors with a lower risk tolerance. It allows them to make solid choices that are likely to be compatible with a long-term buy and hold investing strategy.

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POSTED IN: Investing