Yes, you have read that right.
With the PSEi being bullish these past weeks and a lot of people are earning huge, everyone seems to want to get in and learn how to invest directly in the stock market.
I have workmates and Facebook friends asking me how the stock market works, how to earn from it and how can they start investing.
For these queries, I share with them that I learned the easiest and most effective way of directly investing in the stock market when I joined Bo Sanchez' Truly Rich Club. I do not need to learn about the technical stuff because I have mentors in the club guiding me all the way. Learning about stocks was only the tip of the iceberg when I joined the Truly Rich Club. What it taught and actually brought me was financial wealth and spiritual abundance at the same time. I shared about this in a previous post. To read my full story, click Why Should You Join Bo Sanchez' Truly Rich Club.
Yes, investing in the stock market is a great way to grow your money. At an average of 12% growth per annum, way higher than your time deposit and special deposit account interests combined, it is a financial tool that beats inflation. Because the yields are higher than the inflation rate, you are not losing the value of your money.
The world of investing is so promising and so scary all at once. You get high returns, but then you must also consider that the market might crash! Like many things, investing comes with risks and rewards. As for the stock market, it has high risks and high rewards.
Before you directly enter the stock market, make sure you have the following:
1. Life Insurance
As one of my mentors would say, "We buy term insurance while we are still in the process of building our wealth." The purpose of insurance is simple. That is if God calls you home today, your children will not go hungry.
To read more about term insurance and how affordable it actually is, click Insurance, Anyone?.
2. Emergency Fund
When I first invested in the stock market back in 2013, I did not have an emergency fund yet. After six months, my mother was hospitalized and I had very little cash. I had no choice but to sell some of my shares at a loss. Lesson learned.
Do not put all your money in one basket, in this case, your money in investments. Make sure that you have an easily accessible emergency fund. This, I believe, is what banks are used for.
Before you do anything else with your money, make sure that you have an emergency fund of at least 6 months income stashed away.
3. Timetable and Investment Goals
The rule of thumb is this: For long term, invest aggressively; for the short term, invest conservatively.
For various goals, the stock market is not your only option.
For short term goals, like down payment for a new car or an expensive vacation that you are planning after three years, you can grow your money in fixed income funds.
For mid- to long-term like your child's college education, consider products that fall nicely between conservative and aggressive risk appetites like balanced funds.
For long-term goals like retirement, and you are still a long way from retirement, it makes sense to invest in the equity based investments (stocks). It has high risks, but high rewards potential.
So, are you ready to invest?
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