Is There Actually Simple Math Behind Investing?

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Where Do You Begin

The math comes into play if you want to understand investing before investing. The biggest question that you need to answer is how are investments valued?

Method 1: Income Approach

How much is a company worth to you?

Method 2: Market Approach

Sometimes it may be too difficult to project the future of a specific company. The company may be too young or small to realistically project its growth into the future.

Method 3: Transaction Approach

Similar to the Market Approach, the Transaction Approach relies on a group of comparable companies.

Basic Concepts For Intimidating Math

These three concepts are important to be aware of if you are beginning to invest. But do not hold yourself back from investing if you do not grasp the math behind each method. Even professionals rely on incredibly complex technology and templates to do the math for these methods.

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Matt McDonough

Matt McDonough

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Hello! I am a CPA by day, writer by night, and adventurer on the weekends. I’m on the lookout for fun ideas to read, please send anything interesting my way!