Learning how to invest intelligently for retirement can be a challenge. Even for those who went to college for business or finance, or those of us who eagerly read dozens of best-selling money/finance books, sometimes understanding the fee structures, tax codes, or financial statements from stocks and mutual funds can be a touch confusing. The key is to avoid getting intimidated and to remember you have plenty of tools like a stock analysis spreadsheet at your disposal to make smarter plans with your money.
What Is Value Investing?
Value investing was an idea first put forward by economist Benjamin Graham. Graham wasn’t just from an impressive academic background (graduated Columbia, taught UCLA) but also worked on Wall Street for real life experience. He is widely seen as the “father” of value investing and this is a style of stock investing that has remained incredibly popular.
Value investing, simply put, is looking for stocks that seem to be undervalued based on fundamental analysis and investing most or all of your investment funds in those stocks. The idea is that by only purchasing undervalued stocks you are always buying at a discount. This means you’re already ahead the moment you make a purchase. If you spend only $100 for a stock that should be worth $135 then in theory you’re already up!
This is an idea that Irving Khan and Warren Buffett have both used to become extraordinarily wealthy.
Value investing is often applied not only to stocks but other markets like Forex, commodities, or other markets. This concept of value investing is extremely popular for investing in real estate.
Why a Spreadsheet?
A spreadsheet can do several important things to improve your value investing results. One thing is weeding out information overwhelm. Depending on the fundamental signals that you believe are most important, a quarterly report may bring out a wide array of numbers that don’t matter to you. You can customize your spreadsheet to track the numbers that matter specifically to you.
This also allows you to put down rows of prospective stocks to buy and compare them with one another using the numbers you care about that. The functionality of spreadsheets allows you to re-arrange rows based on specific column numbers. Prefer dividend percentage? You can compare stocks by that. Want to see cash on hand? You can compare stocks by those numbers, as well. In other words, a stock analysis spreadsheet can be your secret weapon to allowing you to analyze stocks by the fundamental indicators that matter most to you.
They also allow you to quickly spot outliers that might give you pause. Or go the other way and encourage you to actually purchase and buy.
What Does This Mean?
There’s no question that value investing is going to continue to be a tried and true strategy for building wealth. Whenever you are buying at a discount, or the equivalent thereof, you come out ahead the moment you buy. Add in dividends, stock splits, or stocks going up and it quickly becomes clear how smart value investing using your stock analysis spreadsheet can quickly form into an avalanche of positive results!