Investing is a process that involves purchasing assets that are expected to increase in value as time passes and provide capital gains or income payment returns. Investing can be done actively or passively, and the phrase “investing” can be used to refer to either business or personal gain. Those employed in investing rely on tools and skills like Microsoft Excel and financial modeling to complete daily work tasks. If you are unsure whether learning investing is right for you, consider reading on to learn more about the myriad uses of investing tools and techniques. Not only will learning investment strategies open up a number of new career opportunities, but it also has many potential personal uses.

What is Investing? 

In the most basic sense, investing involves purchasing an asset at a lower price and selling it for more than this value. The return on this investment is a capital gain. One way to make money investing is to sell assets for profit and earn returns on them. The amount the investment gains between when it’s purchased and sold is referred to as appreciation. Another way investing operates is when individuals purchase and hold assets that generate income. In this instance, the goal isn’t to sell the asset to realize its capital gains but to purchase assets capable of generating cash flow in the long term and hang onto it.

When they speak about investing, people often refer to financial markets in which investors come together to purchase and sell assets like bonds or stocks. It’s common for stocks to pay Investors dividends, which take the form of additional stock or cash distributed by public companies to shareholders. Those who work in income investing strive to earn a steady income flow from dividends without selling stock shares. Those who invest are looking to make compound interest on their investment. This occurs when the initial investment begins to earn returns of its own. Compound interest helps many individuals reach their investment goals for educational expenses or retirement.

Investment takes many forms. The most common types are stocks, bonds, mutual funds, exchange-traded funds (ETFs), and certificates of deposit (CDs). Stocks, also known as shares or equities, are the most widely known investment type. Those who purchase stock buy ownership stakes in a publicly traded company, such as Microsoft or Apple. When purchasing bonds, individuals lend money to an entity like the government or a business. Local governments issue municipal bonds, whereas companies issue corporate bonds, and the US Treasury issues Treasury notes, bills, and bonds, all of which are debt instruments purchased by investors. Mutual funds consist of a pool of money from many investors. This pool is broadly invested in many companies and is either actively or passively managed. ETFs operate similarly to mutual funds in that they are a group of investments tracking a market index. However, unlike mutual funds bought through a fund company, ETF shares are purchased and sold on stock markets. CDs are low-risk investments in which the investor provides the bank with a specified amount of money for a determined period and receives interest. 

Professional Uses for Investing

Those who have knowledge of finance and investing can pursue many high-paying careers. Professionals who work with investments perform a range of tasks for their employers, which vary depending on the type of financial work they’re hired to handle. Investment Bankers serve as financial advisors for corporations who issue bond shares or stock to help their company raise money or merge with other companies. Financial Analysts are hired to perform tasks like monitoring market trends, studying financial statements, and creating financial models for their organization. Stockbrokers are licensed professionals who purchase and sell securities like stocks on behalf of clients. 

Regardless of their place of employment, most individuals who work with investing share core responsibilities, including financial modeling, market analysis, stock market monitoring, and corporate valuation. Read on to learn more about each of these skill sets and the essential role they play in finance-related careers.

Financial Modeling

Financial modeling involves studying how a company performed in the past to predict the possibility of future financial outcomes. Financial modeling is a useful tool that helps financial professionals anticipate how a project or business will perform based on several core factors, in addition to risk assumptions and growth. This process is important because it can present a snapshot of the variables that must be considered when making financial forecasts. Financial models are either created from scratch or based on existing models.

Stock Market Monitoring

The stock market is a complex network of different trading activities in which shares of a company are purchased and sold. It plays an integral role in the economy because it enables money to move from investors to companies. Monitoring how the stock market is performing helps investors stay current on market volatility and gain early insights into emerging risks or market volatility so risk management strategies can be implemented as needed to protect investments. 

Corporate Valuation

In finance, corporate valuation involves establishing a value for a business entity. This essential component of corporate finance is necessary for mergers and acquisitions, in which a concrete decision must be made about whether to acquire a company and how much it is worth. Corporate valuation is also essential to effectively managing a company, determining how it generates value, and establishing growth strategies. Additionally, portfolio management and tax assessment also require knowledge of corporate valuation. Various corporate valuation methodologies have applications in different situations, including discount cash flow analysis, trading multiples, and percent transactions.

Market Analysis

Another essential concept in investing is market analysis. This form of research is used to size and evaluate markets. It involves carefully reviewing and analyzing relevant data to spot growth opportunities. Traders and Investors often work with quantitative financial data, including market indicators, to anticipate market shifts. Knowledge of these shifts can help financial professionals create more effective models and make data-driven financial decisions.

Other Uses for Investing

In addition to its professional applications for those who work in finance, investment strategies are also helpful for personal tasks, including 

Saving for College

Because college or university study can cost tens of thousands of dollars a year, many individuals and their families begin saving for college-related expenses early to ensure adequate funds are available down the line. Some of the most popular investment types for college savings are 529 plans, mutual funds, custodial accounts, and savings bonds.

Saving for Retirement

Another popular use for investing is as a means to save for retirement. There are various methods available for retirement savings. Some individuals open retirement-specific savings accounts like a 401K or IRA, which provide retirement savings incentives. Unlike typical investment accounts, these forms of savings accounts provide a tax break on savings, either upfront or when the funds are withdrawn. While the money is being invested, it can grow without being taxed. Some employers sponsor retirement plans for their employees in which they match some of the money that’s contributed. Other individuals may not have this sort of workplace investment and will need to contribute to their IRA on their own.

Investing in Real Estate

Another popular form of investment some people opt for is real estate investment. Those who opt to invest in real estate can enjoy many benefits from this type of investment, including strong returns, predictable cash flow, diversification, and tax breaks. Some who invest in real estate make money through rental income, whereas others may opt to purchase and sell properties to generate revenue. Real estate investment trusts are another popular way to invest in real estate without needing to operate, own, or finance properties. One of the main benefits of investing in real estate is it can generate a substantial amount of cash flow that is likely to strengthen over time as the mortgage payment goes down. Another reason why real estate is a popular investment option is because its value often increases over time and leads to a profit when it’s sold.

Learn Investing Skills with Noble Desktop

If you’re interested in learning how to invest like a pro, let Noble Desktop help. Noble offers corporate finance, business investing, and stock market investing classes so that learners at all levels can find coursework that meets their professional needs.

In Noble’s Stock Market Investing class, participants explore the core components of the stock market, including valuation, investing, and stock movements. Students study financial statements, valuation techniques like DCF analysis and P/E ratios, and the factors that affect stock prices. Those enrolled study recent earnings releases and valuation multiples from companies like Apple and Google to establish a framework for investing. By course completion, all learners will have a robust understanding of financial markets.

Noble also offers a Financial Analyst Training Program that takes learners from basic spreadsheet skills into intermediate-level Excel training. Participants study financial accounting and corporate finance concepts and create a valuation model for a public company. This comprehensive program prepares students to work with basic Excel concepts, such as shortcuts, formulas, functions, and PivotTables. Learners then move into more complex spreadsheet skills, such as working with cash flow projection tools and financial functions. Instruction is also provided on DCF modeling techniques and corporate valuation principles.

This bootcamp is designed to prepare students for a job at a top financial firm. Those interested in enrolling will find it helpful to have prior knowledge of finance and accounting. A short pre-learning guide is sent to all students one week before class begins.

In Noble’s Financial Modeling Bootcamp, students receive hands-on training in core accounting and finance concepts. Participants study corporate valuation, finance, and accounting in this intensive program. They also build a financial DCF model based on a real company using Excel. Prior financial experience is helpful, though not required, as a prerequisite. Additionally, intermediate-level Excel for business knowledge is required, including knowledge of iF statements, PivotTables, and VLOOKUP. 

All Noble classes are taught in person in New York City and are also available live online. Tuition includes the option of a free course retake for up to a year.