Investment Fundamentals

Circle of Competence

Definition

What is Circle of Competence?

The industries, businesses, and investment types an investor understands well enough to evaluate.

Example in practice

A software professional may analyse technology companies more confidently than mining companies.

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The original amount of money invested or lent, excluding later returns.

Money or other resources committed to produce income, growth, or another economic benefit.

An asset or commitment of money made with the expectation of future income, growth, or both.

Anything with economic value that can be owned or controlled.

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