 |
| http://www.flickr.com/photos/85429509@N00/1555706680 |
For the past days, since I became active in writing blogs again, I have been receiving a number of queries about stock market investment. This post aims to address those concerns. Here are to name a few:
1. I want to invest in the stock market. How do I start?
Before asking how, you must have an answer to WHEN do you want to start. Most of the time, people want to invest, they ask questions and get answers, but then do not start investing at all. I encourage you to start investing NOW. If the market is down, do not wait for it to go up. This is a great time to buy because this means that you can buy great companies at a lower price. When the market goes up, keep on buying these great companies. TEL (PLDT) which costs Php2748/share now will definitely cost more than that after twenty years right? Back in 1986, it costs less than Php10/share.
Once decided, the question now is how do you want to invest in the stock market? Is it Directly or Indirectly?
Directly is when you have a stockbroker, who acts as a middleman every time you buy and sell stocks, but it is YOU who decide which companies to buy or sell. To be able to do this, you must have the time to learn how the stock market works and how people earn money and lose money from it. As for me, my stockbroker is COL Financial. It is the leading and fastest growing online stockbrokerage firm in the Philippines. They offer investment seminars for FREE. Please check their website for schedules.
Indirectly is through a mutual fund. This is for people who want to invest in the stock market but do not have the time and knowledge to do so. A fund manager will do this for you. Talk to your financial advisor (ahem!). Discuss with her the kind of investment that you want (either low risk low return, or high risk high return), how much money you want to invest (maybe one time payment or multiple pay), if you want something that is pure investment, or you prefer that has insurance coverage. It can be as flexible as you need it to be.
2. How much money do I need to invest in the stock market?
If directly, you can start by opening an account with as little as Php5,000. If indirectly, you can invest even with only Php20,000 per year.
Investing 20% of your income for your future is a good start, which increases as your income increases.
3. Can anyone invest in the stock market?
As long as you have a regular source of income, like your salary, then you can invest in the stock market. It is not as complicated as it seems to be. Even my kids, who started investing at aged 5 and 1, are stock market investors. Of course, it is I who manage their accounts. As parents, I believe that it is our responsibility to do what we can NOW to secure their future.
4. What is the interest rate in the stock market?
On average, it ranges from 12 to 20 percent per year, compounded. Although this is not guaranteed, it is still higher than what your favorite bank could offer. Plus, it is higher than the inflation rate. Do not lose the value of your money. Invest it where it grows faster to beat inflation.
One Last Note
To truly appreciate it, what you invest in the stock market is money that you will not be using for the next five years, at least. Remember that this is a long term investment. If you put your "pamalengke" money in there, you might be needing it soon and have no choice but to sell at a loss.
Set aside an Emergency Fund. Your investment in the stock market will be your Retirement Fund.
I hope this post was helpful. If you have other queries, please post them on the comments below.
I hope this post was helpful. If you have other queries, please post them on the comments below.
Happy investing!
