3 Steps to Evaluating an Investment Company

Choosing the right investment company for your money can be a rather daunting task. If you happen to be in the middle of an economic recession, the choice becomes only more difficult and stressful. The key is to find a private investment company that not only works for you but can also put your mind at ease about risking your hard-earned money. Luckily, there is a common process known as the 3-Ps that is used to evaluate whether a company is able to produce profitable results on a regular basis.

1. Philosophy

Consider the general beliefs of a given investment company. The company’s views on market timing, growth versus value shares, and investment research all figure in to the investment company’s overarching philosophy. They might be the professionals, but you should still agree with their philosophy before deciding to use their services. Also, when questioning their philosophy, request to see proof that exemplifies what they claim to believe.

2. Process

The process is essentially how the investment company puts their philosophy into practice. Consider what brings them to choose certain assets out of those available, or how they decide when and what to buy and sell. It is especially important to look at what controls they have in place for making decisions, as well as monitoring and promoting various investments. For example, if a company claims to have a “green” philosophy about the types of companies they invest in but they regularly have international petroleum investments with their clients, you should be wary of their processes.

3. People

For many potential investors, this becomes the most crucial point in the evaluation. The people you should look at above all others are the fund managers who actually handle the money. Be sure that they understand the philosophy and process of the company. Ask questions about how long they’ve been with the company, how are they chosen, and to whom they report. Most importantly, if dealing with a team of fund managers (as many companies are set up), you need to be certain that the team can actually function as teams are meant to. All members of the team should have a solid understanding of the practices of the company, not just one or two of the fund managers. And if being presented with information on the track record of a given team, find out how long the current members have been together. If you are being given examples of work done 5 years ago, and turnover has replaced the majority of the team members since then, then these examples do not reflect the current team’s work.

There is no guarantee that any one company is going to meet your financial investment goals, but by following the 3-P evaluation process, you are more likely to find an investment company with which you are comfortable working.


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