What is Investing?
In the words of Benjamin Graham, investment activity is defined as mentioned below:
“An investment operation is one that, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
It Can Be Classified As Follows:
Investment Function:
Investing entails great efforts in terms of research and wises the investment options available, formatting their appropriateness for the wants of the investors and their appropriate value.
Investing is not a one-time activity but involves regular tracking, monitoring, and appropriate changes to the investment resolution based on a new set of information and consideration.
The activities linked with investments must be embarked on in a well-organized and systematic way.
Systematic Analysis:
Buying shares of a company is similar to taking part in a business. Unquestionably, buying a business fully or partly is a substitute for starting a business and requires some research analysis when taking into account to start a business on a range of magnitude of the business – product, customers, inputs, outputs, bargain power of business vis-a-vis other external parties such as suppliers, customers, and others, competition, regulatory environment, potential opportunities, threats.
Protection of Investment:
The primary purpose of investing is to look after the investment value for which it is significant to spot opportunities that offer a margin of safety (MOS).
In investments, this indicates investing in opportunities available at prices lower than their supposed value. With strong research and monitoring, an investment portfolio should be able to defend the investor’s investment value over an appropriate investment horizon, regardless of short-term fluctuations in the market.
Sufficient return would most likely mean risk-adjusted return in contrast to other challenging opportunities for invested capital. It is significant to understand the risk and return features before carrying them out. Investors who follow the above belief system are occupied in investing. Subsequent are the leanings for frequent investors from this definition of investing.
