Evaluating Your Investment

[Viral.D]

Are you interested in a new investment or evaluating investments you already own? While there are some complex investment analysis tools, some of the best ways to evaluate an investment are based on simple and practical assessments. These are the 3 questions I ask initially to evaluate an investment before I research further.

1. Valuation
Am I getting an asset that is cheap?
Market and Economic Cycles
PE Ratio

2. Does the Investment Fit My Goals
Income investments - Will I get income while I own the investment
For example, with a stock, can I earn a dividend or sell a covered call to increase income?
Or Capital Appreciation
Or Both

3. Is the risk acceptable