Getting started with investment research: A beginner’s guide
This beginner-friendly guide takes investors through a simple four-step process to get started with investment research. Starting with building the high-level macroeconomic context, investors will learn how to hone their own research approach, learning key analysis terms and how to apply them.
Authors: Navisha Joshi | Andrew Lacey
Last updated: 3 September 2026
Developments in technology, innovations in investment products, and a sustained decline in costs mean investing is now more accessible, simpler and quicker than in the past.
However, having fast and easy trading options at your fingertips reinforces the importance of investment research. If you’re buying and selling securities yourself, you need to know what is in your portfolio, and why you own it.
Spending time gathering information on investments is essential to building this knowledge, and can provide you with more confidence in your decisions to buy or sell. Investment research can’t guarantee positive results, and markets are unpredictable, especially in the short-term, but research can help you make informed decisions.
Useful information for research can be found in many places, including company financial statements and regulatory filings, earnings releases, fund factsheets and reputable financial news providers.
An increasing number of investors are also making use of artificial intelligence (AI) to value and assess investments. AI assistants can be very powerful tools, but a solid grounding in some research essentials can help you to understand the inputs and assumptions (and identify any possible 'hallucinations') behind any AI output.
This guide is intended to introduce important elements of investment research and should not be taken as investment advice. This is not a comprehensive guide and only you can decide the research process that works for you.
Researching and managing your portfolio not for you? Don’t worry. You can still choose to have your investments managed by our experienced investment team, in one of our managed investment styles.
How to do your own investment research
Research can incorporate many elements. While investors can have a preference for certain types of investment analysis, many will seek to combine inputs from several approaches to form a rounded view.
Two important terms to understand as you begin research are top-down and bottom-up analysis.
When forming a top-down view, investors often begin by getting to grips with the big picture. This typically involves reading news and understanding world events, and often includes elements of macroeconomic research, which is the study of an entire economy (or economies). We explain macroeconomic research later in the guide.
A bottom-up approach refers to an investment methodology that prioritises individual company/security analysis. Professional research analysts typically focus on fundamental analysis of an individual security, examining financial statements and business models to determine what they believe to be ‘fair value’. The analyst may also factor in industry conditions, peer analysis, sector performance and market cycles, among other variables.
Fundamental and technical analysis are both commonly used methods for analysing investments and key elements of bottom-up research.
Fundamental analysis typically seeks to identify, based upon the investor’s opinions, the fair value of a company (or its intrinsic value). Fundamental analysts seek to build a robust framework that uses company data to find assets they believe have attractive growth potential for the longer term. Fundamental analysis can be more approachable for newer investors as it can help to form a clearer picture of what a given company does, its valuation and its general health.
Technical analysis, in simple terms, will typically assess the recent movements of a market or security and compare it to past behaviour. It is the systematic study of a financial instrument's movements, often focusing on trends, averages, and market patterns. Many investors who use technical analysis do so in conjunction with fundamental analysis to help manage their portfolios.
Investors may have a bias towards top-down or bottom-up analysis, but in practice many – if not all – will use a combination of both to arrive at a balanced conclusion.
A simple 4-step framework for self-managed investing research (example)
If you want to research investments yourself, breaking the process down into a few steps can get you off on the right foot.
It can take time to find an approach to research that works for you, and only you can know when you’re comfortable with your decisions. The below is an example framework that might help you to get started.
Step 1 – Start with a top-down view
As mentioned earlier, macroeconomic research is often where investors begin when forming a top-down view, to help understand the investment backdrop that may influence different regions, sectors and companies.
Macroeconomic context can include:
- Thematic drivers – Identifying resilient themes that an investor expects to underpin long-term growth can have implications for both asset class, regional and sector exposure. Examples might include the development of AI, or the transition to renewable energy. Markets move around constantly, and periodically experience shocks that can cause market setbacks. Understanding the long-term themes represented in your portfolio can make it easier to contextualise short-term volatility.
- Growth, inflation and interest rates – Many investments are sensitive to changes in borrowing costs, inflation trends, and the strength of economic activity. Tracking the broad direction of these factors can help you frame which parts of the market may be more exposed. Bond allocations are, for example, more sensitive to changes in interest rates, while your equity exposure may be influenced more by an improvement or deterioration in an economy's growth prospects.
- Geographic and regional conditions – When considering geographic or regional exposure, professional investors will often consider a balance of economic growth and economic stability. For example, some emerging market economies can exhibit rapid economic expansion for periods, but may go through more pronounced economic slowdowns. Some developed market economies generally exhibit slower, but less variable growth.
Understanding these differences can help you interpret how macroeconomic developments might affect different regions. Economic performance does not necessarily equate to financial market performance. However, it can be an influential factor, reflecting the financial health of consumers and businesses, and is an important part of the backdrop for setting expectations for the future performance of a market or a company.
Step 2 – Decide if you are researching funds or individual stocks
Collective investments – which include funds, investment trusts and ETFs – can often be a simpler starting point for investors because they may offer more diversification in one purchase.
Research for funds may focus on:
- What the fund holds and how concentrated it is (for example by region, sector or a small number of large positions).
- How it is managed (passive/index-tracking versus actively managed)
- What the fund is benchmarked against, and how performance is assessed
- Fees and other costs that may affect returns over time
For passive ETFs for example, the benchmark is typically an index it seeks to replicate. Measures such as tracking difference (how returns have differed from the benchmark over time) and tracking error (how closely the ETF has tracked the benchmark historically, usually measured as the variability of that difference) can be useful when comparing similar funds.
For actively managed funds, the benchmark may be an index the manager aims to outperform, but performance should also be assessed against the fund’s objectives, risk level, and peer group.
Individual stocks can be rewarding to research, but typically require more initial and ongoing work (as set out below). Single-stock holdings can also increase concentration risk, which is one reason some investors prefer diversified funds.
Step 3 – Weave in your company-specific research (if appropriate)
If you’re buying the equity of individual companies, you could begin by developing a sound understanding of what the business does.
- What are its products or services?
- Who buys them?
- Where does the company operate?
- Who are the key competitors?
Once you understand the business, you can use company disclosures and financial statements to build a clearer picture of performance and risks. Key metrics such as earnings per share (EPS) and the price-to-earnings (P/E) ratio are common starting points, but they are most useful when compared across similar companies, wider industry, and over time. Building this valuable context can help investors understand what the numbers mean – how does it compare to the company’s sector peers/to the sector overall/relative to history.
You might also consider what drives revenues and expenses for companies you’re researching, and how exposed they are to broader developments, such as shifts in the macroeconomic picture. For example:
- If oil prices rise sharply, could that increase input costs for the business – or could it improve revenues for an energy producer?
- If wage inflation is rising quickly, does the company have high labour costs that could pressure margins?
- If interest rates are rising, is the company reliant on borrowing, and how easily can it service debt?
These are only examples, and you may decide that short-term factors do not materially change a long-term investment case. Even so, periodic check-ins with your portfolio holdings and staying up to speed with events can help you stay informed and avoid surprises.
You don’t have to research individual companies. Collective investments such as ETFs, Investment Trusts (ITs) and/or Open-Ended Investment Companies (OEICs) may be a better fit.
Step 4 – Maintain your research, and schedule check-ins
Research is an ongoing process that is tied into ongoing portfolio management.
Although investors should be comfortable with investing with an extended time horizon, portfolios do move. Periodic, but regular portfolio reviews are essential to maintain diversification and balance at the right level for your risk tolerance. Below are some considerations for investors performing routine portfolio maintenance.
- Has your asset allocation shifted? Are you happy with the current portfolio composition? Over time your portfolio mix can move, as investments will almost certainly move differently relative to one another. This can mean periodic rebalancing is needed.
- What would change your mind on an investment? e.g. Is the company strategy the same? Have unexpected risks developed in a region you considered stable?
- Schedule periodic reviews and use company updates or fund reports to check whether the original rationale still holds
Remember, not every investment choice is going to go your way. Some positions will not perform as expected. Equally, not every movement will require an investor to take action, given the long-term mindset we advise for investing. A consistent research process can help you decide what to do next with greater conviction.
This guide is intended to introduce important elements of research, and should not be taken as investment advice. Every investor is different, and it will take most investors some time to find an approach to research that works for them. Remember, if you don’t think investment research, or managing your portfolio is for you, a professional investment team can manage your portfolio on your behalf.
Key investment research terms to know
Below is a list of common terms you are likely to come across when researching investments yourself. Where ratios are included, these are for illustration only. No single ratio can be relied upon to form a rounded investment view.
We have provided a shorter list of useful terms to get started, with other terms that you might come across during your research journey explained a bit later on. You can bookmark this page, and return to it any time you need.
This list relates to common terms in research. We also have a glossary of investment terms if you are starting your investment journey and want to understand more about how it works.
Category | Term | Explanation |
|---|---|---|
Understanding company valuation and price | ||
Market Capitalisation (Market cap) | Market cap is the total value of company equity based on its share price. It fluctuates as the share price changes. The most commonly seen market cap categories are large-cap, mid-cap and small-cap. | |
Earnings Per Share (EPS) | EPS is widely used to assess a company’s profitability. It indicates earnings attributable to each share. A higher EPS generally indicates strong earnings, which can enable the company to reinvest profits and grow, or distribute profits to shareholders as dividends. | |
Price to Earnings (P/E) Ratio | The price-to-earnings (P/E) ratio compares the company’s share price to its earnings per share. It’s popular with investors as it links price to profit to help assess whether a stock may be overvalued or undervalued. The P/E ratio can be useful when comparing companies in the same sector. But it’s worth remembering that the P/E ratio may not provide a reliable way to compare companies in different industries, as earnings and valuations can vary significantly from one industry to another. | |
Overvalued | When a share or market is described as ‘overvalued’, the investor or investors in question typically believe it trades at a market value higher than they can justify. Investors regularly form different – at times very different – opinions on what constitutes ‘undervalued’, ‘fair value’ or 'overvalued’ for an investment. | |
Undervalued | When a share or market is described as ‘undervalued’, the investor or investors in question typically believe it trades at a market price lower than they can justify. | |
Company profitability and financial health | ||
Revenue | Revenue is the total money generated by the company through the sale of products or services as part of its normal business activities. It’s the company’s total income before deducting any costs or operating expenses. | |
Gross Margin | Gross margin is the percentage of sales revenue left for a company after subtracting the cost of goods sold. It measures how much of every unit of revenue is left after paying direct costs. It can offer an indication of ‘pricing power’, which is how much a company can control what it charges for its product(s). | |
Debt to Equity (D/E) | Debt to equity is a financial ratio that measures a company’s total liabilities against shareholders' equity. This ratio is typically considered by investors who are evaluating company stability as it shows how much a company relies on borrowing. | |
Free Cash Flow (FCF) | Free cash flow is the cash a company generates after accounting for its operating expenses and capital expenditure. This money may be used to pay back creditors, for expansion goals or to be distributed as dividends. | |
Market behaviour and liquidity | ||
Beta | Beta compares the sensitivity of a company’s share price to wider market movements. A value above 1.0 suggests that the share has historically been more volatile than the market, while a value below 1.0 suggests it's been less volatile. A 2.0 beta shows that a company is twice as volatile as the market. Most investment platforms will display Beta among other fundamental data when you are looking at asset details. | |
Bid-Offer Spread | A bid-offer spread is the range between the highest price that a buyer is willing to pay for an asset (bid price) and the lowest price at which the seller is willing to sell (offer or ask price). | |
Competitive positioning | Moat | A ‘moat’ is a term that typically refers to a company’s ability to maintain a competitive edge over its peers. Companies may reference factors as diverse as scale (size), brand strength, cost advantages, switching costs, intellectual property, among others. |
Dividend Yield | Dividend yield shows how much the company pays in dividends, relative to its share price. It is expressed as a percentage and often looks at the total dividends paid over the past 12 months. | |
Investment approaches | ||
Bottom-up Approach | A ‘bottom-up’ approach refers to an investment methodology that prioritises individual company/security analysis. Analysts typically focus on fundamental analysis of an individual security, examining financial statements and business models to determine what they believe to be ‘fair value’. The analyst may also factor in industry conditions, peer analysis, sector performance and market cycles, among other variables. See also ‘top-down’ approach, below. | |
Top-down Approach | A top-down approach refers to an investment methodology that typically factors in comprehensive macroeconomic analysis before narrowing in scope to assess sectors, companies and individual securities. Analysts may use this ‘big picture’ approach to identify areas of opportunity that are exposed to long-term, supportive themes, before targeting particular investments. | |
Qualitative Factors | Qualitative factors are non-numerical considerations that affect a company’s long-term performance, competitive positioning and risk. These factors often include: | |
Quantitative Factors | Quantitative factors are measurable numerical indicators, typically drawn from financial statements and market data. Examples include some terms defined in this list such as: | |
Terms to help you monitor your investments |
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Analyst or Broker Forecasts | Broker/analyst forecasts refer to the views of professional analysts regarding an asset’s future performance. Analysts may offer price targets – what the analyst believes is a fair price for the company based on their own modelling and assumptions – and/or offer ratings such as buy, sell or hold. Consensus estimates typically offer an aggregate rating (i.e. buy, sell or hold), usually formed by a data provider (e.g. Bloomberg) and based on the views of multiple analysts all covering the same company/security. | |
Average Trading Volume (50-day Average) | 50-day average trading volume is the average number of the company’s shares traded in a day, over the last 50 days. It indicates how actively the company’s shares are being traded. A higher trading volume implies higher liquidity, meaning it is easier to buy or sell without affecting the share price too much. A lower volume can mean wider bid-offer spreads and larger price movements. | |
Capital Expenditure (CapEx) | Capital expenditure refers to company spending on the purchase, maintenance and upgrade of long-term assets. Some investors may consider rising capex intentions as a signal of company confidence (or lack thereof), but will also need to reach a judgement on whether the expenditure looks justifiable and affordable. | |
Earnings Before Interest and Taxes (EBIT) and Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) | EBIT and EBITDA are designed to allow investors to compare the profitability of companies without the influence of certain external factors. | |
Enterprise Value (EV) | Enterprise value measures the total value of a company, including debt and cash. It is considered to be a more comprehensive measure than market capitalisation. Investors often use EV to compare companies with different levels of debt. | |
ESG (Environmental, Social and Governance) | ESG is a framework used by businesses and investors to evaluate a company’s sustainability, ethical practices and risk management. ESG is assessed in order to understand if a company could be financially or operationally affected by its approach to the factors outlined below. | |
Interest Coverage Ratio | Interest coverage ratio is a financial measure of how easily a company is able to pay interest on its outstanding debt. It's calculated by dividing earnings before interest and tax by the applicable interest expenses. | |
Moving Average | Moving average is a commonly used technical indicator that calculates the average price of an asset over a defined time period (such as 10, 50 or 200 days). The moving average smooths out short-term price fluctuations, and can help in identifying the trend direction of a share. | |
Net Profit Margin | Net profit margin is the percentage of revenue remaining as net income (profit) after all expenses have been accounted for. It is a measure of how much net income is generated from every unit of revenue. | |
Operating Margin | Operating margin shows how much profit the company makes from each unit of revenue, after covering its operating expenses. | |
Payout Ratio | Payout ratio is the percentage of a company’s net earnings paid out to its shareholders as dividends. A lower payout ratio is not necessarily negative, it may mean that the company is simply retaining its earnings to reinvest, pay off debt or build cash reserves. | |
Price to Book (P/B) Ratio | Price-to-book ratio compares a company’s market value (market cap) to its book value per share. Book value is total company assets minus the company’s total liabilities. Because the ratio focuses on book value, it does not factor in intangible items, which can be valuable. | |
Price to Earnings Growth (PEG) Ratio | The price-to-earnings-to-growth (PEG) ratio measures the relationship between the company’s price-to-earnings ratio for the last calendar year and the historical earnings per share growth rate. It looks at company valuation in relation to its growth rate. It potentially implies that the market is optimistic (if it is greater than 1) or pessimistic (if it is less than 1) about its growth prospects. | |
Price vs Sales (P/S) Ratio | Price vs sales ratio compares a company's market value to its revenue. It calculates how much investors are willing to pay for each unit of sales. Investors may use this ratio to compare securities within the same sector. | |
Return on Assets (ROA) | Return on assets measures how efficiently a company generates profits from its total assets. A higher ROA may indicate that a company can manage its assets effectively and productively. | |
Return on Capital Employed (ROCE) | Return on Capital Employed (ROCE) is a profitability ratio. It indicates how efficiently a business generates operating profit from the capital it uses. Higher ROCE generally means better use of money invested. | |
Return on Equity (ROE) | Return on equity measures the amount of profit a company generates from shareholder equity. It is commonly used to compare companies across the same sector to assess profitability and efficiency. | |
Total Expense Ratio (TER) | The TER is the annual cost of owning a fund, expressed as a percentage of your investment. It covers management fees and operating costs. A lower TER means less of your return is eroded by charges. | |
Tracking Error | Important for ETF holdings, tracking error is a measure of how closely a fund has tracked its benchmark historically, often calculated as the variability of the difference between fund returns and benchmark returns. Lower tracking error indicates closer historical tracking. | |
Working Capital | Working capital measures a company’s short-term liquidity by comparing current assets to current liabilities. It indicates whether a company has sufficient near-term resources to support day-to-day operations. Working capital varies by industry, for instance industries with longer production cycles tend to need more working capital in hand. |
Risk warning
As with all investing, your capital is at risk. The value of your portfolio can go down or up and you may get back less than you invest.
Past performance and forecasts are not a reliable indicator of future performance. We do not provide investment advice in this guide. Always do your own research.