Do you have money that’s sleeping in the bank? It might be a good idea to set your sights in stock market investment.
History shows that more than letting your money earn regular interest in a bank, owning stocks is one of the easiest and most profitable ways to grow your wealth over a long-term period. Most of the top companies in the country are listed in the Philippine Stock Exchange and just by owning one stock, you own a piece of the company and a portion of their profit.
If you are a beginner and is quite clueless on where or how to start dipping your toes into stock market waters, here’s a quick guide:
1.) Know how much you are willing to invest.
Investing in the stock market is akin to gambling. The stock market price is very volatile. It can go up and down within an hour or even less because its value is determined by how much people are willing to pay as well as how much a company generates at any given time. That is why for a beginner, it is not wise to invest a big amount of money right away. The rule of thumb is that the amount you initially invest should be something that you can comfortably lose or give away.
2.) Get the right stock brokerage for you.
Here is a list of stock brokers who are granted with trading rights in the Philippines. If you want to talk to someone and get expert advice about stock trading, you can choose to get the services of a professional stock broker. A stock broker is usually associated with a brokerage firm who buys and sells stocks and other securities for clients, in return for a fee or commission.
However if you are someone like me who likes to read and research independently, you can also do your stock trading transactions online and save on broker’s fee! Two of the most popular online stock trading platform providers are CitisecOnline (COL) and BPI Trade. Personally, I use BPI Trade on my stock trading transactions for my own convenience, because I have an existing savings account with the bank.
3.) Choose your stocks.
Now, this is where it gets a little bit trickier. There are hundreds of companies listed in the Philippine Stock Exchange, whose stocks you can choose to purchase. Do not let the vast array of options overwhelm you. You cannot just close your eyes, randomly pick one, and then hope that that company’s stock value will increase.
Remember, this is indeed a gamble but you can choose to gamble wisely. Learn as much as you can about the company whose stocks you are interested in. Check their financial statements and read the news.
Ask relevant questions such as:
– How much are they earning?
– How often do they give out dividends?
– Do they have expansion projects planned?
– Are there talks about mergers, partnerships, and such?
-How stable is the company? How long have they been in the industry?
-Do their products remain relevant? Or becoming more relevant?
Even information about intangible and qualitative aspects such as reputation, customer service, goodwill, and such could also be a consideration on whether or not the stocks of a company may be worth investing in.
4.) Study, study, study.
Just like in any field where the constant learner is always at an advantage, the same is true with stock market investors. Continuously study and never cease to learn new things about the field. Even the experts do it to remain on top of their game.
Even equipped with so much information and statistics, it is so difficult to predict the future of a company. That is why they come up with different types of charts and other platforms to present stock market trends and guide us in our trading transactions. Take advantage of this information they provide and use them as tools to help you decide when to buy, sell, or hold your stocks.
“The individual investor should act consistently as an investor and not as a speculator.”
– Ben Graham