How To Become an Investment Analyst

Sakshi GuptaSakshi Gupta | 5 minute read | February 27, 2021
How To Become an Investment Analyst

In this article

There are many routes to becoming an investment analyst, but all require mastering certain skills and technical knowledge. Here is a comprehensive guide with 3 steps to help you become an investment analyst—including key skills, job roles, and responsibilities.

These days, there are many routes you can take on your road to becoming an investment analyst. But they will all require you to master specific skills and acquire some technical knowledge. In this comprehensive guide on how to become an investment analyst, you’ll learn the qualifications you’ll need to develop, the job roles you can land, and the responsibilities you’ll have as an investment analyst, as well as the three steps you’ll need to become one.

What Is an Investment Analyst and What Do They Do?

What Is an Investment Analyst

If you want to work in one of the most coveted career paths in the financial services sector, you should consider becoming an investment analyst. These professionals dedicate their time to examining data to identify investment opportunities and assess outcomes to improve business decisions and make better investment suggestions.

In other words, investment analysts study macro and microeconomic factors to make long and short-term projections about businesses and industries. Based on those predictions and other elements, they can recommend whether their clients should buy or sell stocks. Stock analysts must keep up to date with financial models and economic conditions and stay on track with current developments in the investing landscape.

Stock/investment analysts have a clear profile. They love learning and data interpretations, and they’re natural-born problem-solvers and critical thinkers, which is quite similar to data analysts. Their main role at their firm is to produce:

  • Research reports
  • Projections and forecasts
  • Recommendations about stocks

Types of Stock/Investment Analysts

As an investment analyst, there are two main types of jobs you can land.

Buy-Side Analysts

Buy-side analysts typically work for a financial firm, a mutual fund broker, or a fund manager and research companies in their clients’ portfolios to come up with potential investment opportunities. ‌

Sell-Side Analysts

Sell-side analysts normally work for investment banks and perform narrowly-focused research to provide reports on the financial estimates, price targets, and stock performance recommendations about numerous companies in the same industry. In this role, you would build models to project financial results for your firm.

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Where Do Investment Analysts Work?

Business and financial markets are constantly growing. That’s why some companies need qualified professionals to provide them with financial analysis and investment advice using data analytics. If you choose to become an investment analyst, you could end up working in a variety of companies, including:

  • Investment advisory firms
  • Insurance companies
  • Government regulatory firms
  • Banks
  • Financial planning institutions

Skills You Need as an Investment Analyst

If you wish to become a stock/investment analyst, you should develop your organizational, mathematical, problem-solving, and analytical skills. On top of that, you should work on your:

  • Time management skills
  • Productivity
  • Critical thinking skills
  • Interpersonal communication
  • Research skills

3 Steps To Become an Investment Analyst

Steps To Become an Investment Analyst

People working in investment analysis have an inherent passion for planning, evaluating and comparing facts, making judgments, and making decisions. If you want to spend your days building charts and plotting graphs to contrast different alternatives, this career path might be for you. But before you land your dream job, there are three main steps you should take.

1. Earn a relevant bachelor’s degree

While your soft skills might help you advance in the financial services industry, you’d certainly need to master some technical knowledge for your dream employer to give you a chance. Some courses in statistics, business, and economics might help you get familiar with the field you want to work in. And a more targeted degree could make the whole difference between you getting hired or not.

‌If you’ve set your mind on a career in stock/investment analysis, you should consider getting a Bachelor of Science in Financial Services or one in a related field. In addition, although not mandatory, you could enhance your resume by obtaining a master’s degree that covers:

  • Advanced auditing
  • Financial accounting and reporting
  • Managerial methods
  • Strategic analysis

2. Earn valuable certifications and licensing

In the current job market, sometimes simply having a bachelor’s degree is not enough, especially when trying to climb the corporate ladder. While you may be able to start working at an investment, accounting, or banking firm fresh out of college, you’ll need additional credentials to move further in your career path. That’s why many financial services professionals end up seeking licenses and certifications sooner or later.

According to the Financial Industry Regulatory Authority (FINRA), all firms that provide financial products or services need to comply with a series of regulations to protect their clients. After all, they’re dealing with people’s money, and they must ensure they won’t fall victim to fraudulent scams and unfair practices. Based on the state you’re planning to work in, you might need to obtain a license from FINRA to become a financial analyst, which means some companies won’t hire you until you have one.

Your employer might also suggest you get a Chartered Financial Analyst (CFA) certification to expedite your professional advancement. However, it’s important to note you’ll need at least four years of qualified work experience before being able to apply for this credential. According to the CFA Institute, you’ll also need a bachelor’s degree in finance or accounting and passing scores on all three CFA exams to earn this certification. ‌

3. Get verifiable work experience

Education isn’t everything when trying to advance in your career path as an investment analyst. You must have enough on-the-job experience to prove you’ve mastered certain skills and technical knowledge before you attempt to apply to a higher position. Future stock analysts must strive to earn hands-on experience as early as possible in their careers to have an advantage over other candidates.

Stock/Investment Analyst Salary

Financial products are constantly evolving, and the demand for investment analysts is growing by the day to help companies keep on the right track when facing new challenges. The Bureau of Labor Statistics has projected a 5% growth in the employment of stock/investment analysts before 2029.

‌As the demand grows, the earning potential for those who choose to pursue this career path is also skyrocketing. According to PayScale, entry-level stock analysts with less than five years of qualifying experience have an initial salary of roughly $66,569 a year.

The median salary for an average investment analyst is $83,660, but it can vary depending on which industry you settle in. For example, stock analysts who work in commodity contracts and related financial services can earn up to $100,180, and those employed by insurance carriers can earn about $76,860.

Since you’re here…
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Sakshi Gupta

About Sakshi Gupta

Sakshi is a Senior Associate Editor at Springboard. She is a technology enthusiast who loves to read and write about emerging tech. She is a content marketer and has experience working in the Indian and US markets.