Investment checklist
Every investor wants to invest in the best possible companies and investment products. There are a lot of methods to find the best investment, and on this site you can find the different methods on a checklist. For most checks on the checklist there are articles available. This checklist is continuously updated, so you can come back and see new and additional methods and information to pick your own best investment.
Preparation: Investment risk
First of all, it is important to know that investing includes taking risks. Before investing you should now:
- Risk of investing
- Unpredictability of the stock market
- Predictions of investment experts
Furthermore, you should now how to determine the risk of investing in a specific investment product or company.
Preparation: Investment strategy
Second, you should determine what your own investment strategy will be. Define or adopt an investment strategy and stick to it. Consider taking the next tips into account when defining or adopting an investment strategy.
- The type of investment products you want to invest in
- Guidelines and borders to define your strategy
- How to use the leverage of investment products
- How you make your decisions
- The level of risk you would like to take
- Make a special section for selling shares in your strategy
- Stay involved in your investments
- Investment strategy types
You can consider adopting one of the following investment strategies as part of your overall investment strategy.
- Unpicking stocks investment strategy
Besides determining your strategy, you should also make a section about operating your investment strategy. In this section you can write actions you should take in case a certain event happens. This forces you to take the right actions.
- Let profits run and cut your losses
- Review your investments at fixed times
- Bring your portfolio in line with your predefined equity mix at fixed times
Investment checklist
When operating your investment strategy (and actually making investment transactions), you should have investigated the company you would like to invest in. You should consider the following matters.
- Research and compare company fundamentals
- The latest news about the company
- The strategy and operations of the company
- The investment analysts opinions: buy or sell
- The size and type of the company
- The competitiveness of the market the company operates in
Besides the above mentioned company information, you should be able to answer the following questions.
- Where should the future profit growth come from?
- How well did the company performed in the past?
- Did the company ever made a loss?
- Does the profit or company performance fluctuate a lot?
- What is the quality of the profit?
- Does the profits depends on a few large customers?
- How do external factors like politics, the weather or currency exchange rates affect the company?
- Does the company benefits from the current economical situation?
- Does the company buys their own shares or did it just went public?
- How does other investors think about the company (and research these opinions)?
- How experienced and talented (and fair) is the management of the company?
- Will the company continue to exist over 10 years?
As mentioned before, you should be aware of the results and fundamentals of the company you would like to invest in. You can just look at several indicators.
- Profit and profit growth
- Turnover and turnover growth
- Share price and total company value
- Dividends
- Cashflow
- Solvability and current ratio
- Return on equity (both private and total equity)
- Grahams number indicator
Another way to delve into the companies results is to use one or more of the following (stock or company) valuation methods.
And finally, you should now the current developments of the price of the company's shares. The current sentiment, direction and strength of the trend are very important to determine the short term risks and return. Technical indicators can provide this information for you.
- Different moving average types
- Moving average convergence/divergence (MACD)
- Relative strength index (RSI)
- Average directional index (ADX)
- Average true range (ATR)
Investment checklist updates
Remember: this list is continuously being updated. So come back once in a while or each time you make an investment. This list may help you making better investment decisions.
