Investment Fundamentals
Circle of Competence
Definition
What is Circle of Competence?
The industries, businesses, and investmentAn asset or commitment of money made with the expectation of future income, growth, or both. types an investorA person or organisation that commits capital with the expectation of a financial return. understands well enough to evaluate.
Example in practice
How This Looks in Practice
A software professional may analyse technology companies more confidently than mining companies.
Keep learning
Related Terms
Investment Fundamentals
Principal
The original amount of money invested or lent, excluding later returns.
Investment FundamentalsCapital
Money or other resources committed to produce income, growth, or another economic benefit.
Investment FundamentalsInvestment
An asset or commitment of money made with the expectation of future income, growth, or both.
Asset ClassesAsset
Anything with economic value that can be owned or controlled.