investment analyst

Fund managers have the final say on investing decisions. Investment analysts play a prominent role in compiling the financial data needed to make the right decision. Investment analysts are trained finance professionals who evaluate the current performance of:

  • stocks
  • bonds
  • mutual funds
  • hedge funds
  • other investments

After conducting careful analysis, investment analysts are able to provide key financial advice to either shareholders or businesses. Their job is to make recommendations that will help fund managers maximize growth potential and minimize the risk of loss. Investing is more global in today’s dynamic financial world. So investment analysts often will specialize in a particular region on the buy-side or sell-side. Investment analysts stay ahead of the latest trends impacting their industry to assess investing opportunities.

Salary

According to the Bureau of Labor Statistics, investment analysts and other financial analysts in the United States bring home a healthy average yearly salary of $92,250. This equates to a mean hourly wage of $44.35. Investment analysts working for depository credit intermediation institutions earn slightly less at $89,250. The highest paid are employed directly by securities and commodity exchanges with an average income of $124,400 annually.

Beginning Salary

When just starting out in the field of investment analysis, you’ll likely land in the bottom tenth percentile of yearly earnings with a salary around $48,170. This may seem low. Remember that experienced investment analysts with upper-level responsibilities of often make upwards of $154,680.

Key Responsibilities

Investment analysts have the primary responsibility of analyzing an investment’s true value and creating advice reports based on the investment’s performance. On a typical day, investment analysts can be involved in:

  • evaluating historical stock data
  • studying the latest economic trends
  • evaluating an organization’s financial records
  • determining a fund’s value
  • meeting with investors
  • preparing written reports on their analysis findings

Then, investment analysts have the data-driven knowledge necessary to recommend individual investments or portfolios that will perform well for the company. Investment analysts often report directly to executives. They offer unsurpassed insights into the organization’s prospects on new investing ventures.

Necessary Skills

To be successful as an investment analyst, you must fine-tune your analytical skills for processing a wide array of numerical figures on investments. It’s essential to have the technical abilities to use computer software that:

  • analyzes financial reports
  • finds trends,
  • forms forecasts

Investment analysts should be equipped with solid communication skills to clearly explain their investing recommendations to clients. Being detail-oriented with good multi-tasking and organizational skills is key for investment analysts to carefully compare profitable investments. A certain level of mathematical ability is required for analysts to accurately estimate stock or fund values. Of course, investment analysts must also have the decision-making skills to form valuable recommendations investors can trust.

Degree and Education Requirements

Before going into investment analysis, you’ll have to further develop your financial knowledge and the aforementioned skills with at least a bachelor’s degree. Aspiring investment analysts should attend an accredited four-year college to earn an undergraduate major in:

  • finance
  • economics
  • statistics
  • mathematics
  • business
  • accounting

It’s also important to take course electives in:

  • risk management
  • bond valuation
  • investment analysis
  • options pricing
  • corporate finance
  • derivative securities
  • portfolio management
  • financial reporting

Returning to graduate school for a Master of Science in Finance (MSF) or MBA in Finance is common for investment analysts seeking more advanced positions, such as portfolio manager or fund manager.

Pros and Cons of the Position

Like other finance careers, investment analysts have their fair share of rewards and challenges. Of course, the most obvious advantage of working in investment analysis is the high salary potential that can quickly pass into six-figures. Job prospects for investment analysts are bright thanks to favorable economic growth. Working in investment analysis is ideal for financial analysts looking for promotions into upper-level management roles dealing with stocks. Investment analysts can also tailor their work to their interests by choosing from a variety of industries and investment types.

On the flip side, there’s still heated competition for investment analysis jobs among business school grads. Some employers will require investment analysts have a master’s degree and/or pass a rigorous group of licensure exams. Investment analysts also spend most of their 40+ hours at work behind a desk and meeting with company officials.

Getting Started

While earning your finance-related education, start marketing yourself as an investment analyst by gaining real-world experience. Jump on every chance to participate in:

  • paid or unpaid internships
  • co-operatives
  • consulting projects
  • service learning
  • other hands-on experiential opportunities

Classroom instruction is important, but employers want to see actual investment experience lining your resume. Having at least two to three years of experience working in a financial institution is key for most investment analysis positions. After landing your first job, your employer will likely sponsor your completion of licensing with the Financial Industry Regulatory Authority (FINRA). You can then consider taking the extra step to become a Chartered Financial Analyst (CFA) and earn the world’s most respected investment credential. Becoming a CFA will require that you:

  • have a bachelor’s degree
  • have four years of experience in investing
  • pass three extremely difficult exams.

Future Outlook

Employment growth is expected to remain strong in investment analysis as the need for in-depth reports on financial securities becomes more essential. Portfolios are more complex than ever before, so investment analysts will be hired to make certain the best moves are being taken for profitability. Stricter financial regulations could also result in a greater demand for knowledgeable investment analysts to keep funds in alignment with the rules.

The BLS reports that jobs for investment analysts will grow faster than the occupational average at 16 percent, thus stimulating thousands of new positions. Investment analysts can find jobs in:

  • investment firms
  • banks
  • insurance carriers
  • securities exchanges
  • private corporations
  • some government agencies

Investment analysts use their financial expertise to do research on investment opportunities and form recommendations for investors. Investment analysts basically give glimpses of insight into the latest stock market and economic trends. This helps shareholders or fund managers assess an investment’s growth potential. If you make the decision to become an investment analyst, you can turn your love for numbers into a rewarding, lucrative career in finding the risks and payoffs for large sums of invested money.

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