After he discussed me the basics. The only question I asked him, what are the requirement and how much do I need? Without knowing the big picture about the potential loses and strategy on investing; I came up with the initial funding and started right away. Afterwards I just took care the gaps by researching and asking what I need to know.
"If somebody offers you an opportunity but you are not sure you can do it. say yes - then learn how to do it later" -Richard Branson
I wanted to share this article to every ordinary people who has thoughts on working their finances. This is not a rich quick schemes. But totally something you can learn from scratch.
Many of my friends and partners were interested in investing in Stock market. The only problem is they didn't knew the basics. These are the things that should be in mind before we start putting some hard earned money in the financial market.
Know the nature of the Stock market first. The Stock market is composed of different companies. Blue chips stocks as they called it, are companies that are leaders in the industry. It pays cash dividend to it's share holders. It could be on a year, quarterly or semi annual basis. These companies did exist many decades ago now. I'm not born yet by then, and these companies are tested by time and economic crisis.
Since the stock market are composed of several companies in the country. It could mean the stock market has its ups and down. Its performance are relied on both global or local economy and the company's business nature, management and future expansion.
Meaning to say it is a business, and business needs time to grow. If the company you are invested in are not running so well, It could affect the investment of its share holders. It could be for long term or short term.
On the other hand Stock market could give significant amount of gains to its investors for long term. There are companies who did great and potentially giving you decent amount of returns in the long run.
Reminder:
I will not discuss here the different factors that could affect the market, but the mental mindset and preparation you should need before you start investing in stocks. This would be (DIY) "do it yourself" for most part.
Things you should know:
What is the objective of the investment?
Before you start pouring the fund, ask what you should do with the money in the future. Is the purpose is for retirement money, for buying a house, child education, additional passive income through dividend or future major purchases?
Different objective could mean different investment vehicle and different time horizon or what it means is, the amount of time needed before you actually needed it. An investment to fly off the ground needs enough time, like five or ten years or more.
For example you need a funding for child education and you needed it within five years or earlier. Stock market maybe not suitable investment instrument. We might not know what will happen in one year or three and you badly needed it by that time. I don't have any crystal ball to predict the future. But to manage the risk if your objective is far away from today, you could maximize the market.
You might found out that your objective in the first place is suitable for other investment instrument. For other investment instrument also see UITF, mutual fund and other bank products. There are also insurance product like VUL or variable unit link who has linked investment.
Managing fear in losing money
Stock market are volatile. It could drop a matter of days, giving you temporary lost or we called "Paper lost", on the other end it could go up giving you amount of gains. With that said you should expect some red market or temporary loses in your investment. You should not be too emotional when investing. There are rewards in the Stock market but if you can't stand losing money don't invest without studying the risk involved.
You can manage your fear through proper education about certain investment. There are lots of articles, website, blogs, TV programs, book, and seminar you could attend to arm yourself with the needed knowledge. Being aware is one feet step ahead.
Most of the investor were ruin because any strategy won't work if they can't handle their emotion when seeing their investment turn against them. That's why keeping calm and knowing the basic will keeps you sleeping at night.
What funds to consider putting in?
Money that should go in the stock market should be money you could afford to lose or not to touch for several years. Money that you don't need immediately. Although you could withdraw it in a matter of days, But I'm not giving tips like that. What I'm telling is proper investing of money in the long or short term.
Disciplining yourself on how to properly save is a must, if you really serious about growing your investment in the stock market.
This is the hard part for me when I started. How could I get extra money to invest in the stock market? Considering I could merely treat my parents in restaurant with the salary I make. See Simple Ways to Save.
When you got the opportunity to increase the level of earning money; you'll find it very easy to build your investment. As long of course you do some lifestyle changes. Because most of the time we are accustom to certain lifestyle that we live several years ago until now.
If you find yourself having trouble with lifestyle changes, better commit a decision about it by thinking your goals in the future. Try to be frugal if needed. If it's hard you certainly are growing, because in difficulty times that's where we grow. All of this has to do with end result of having a freedom in the near future.
Increase your cashflow/ income sources
Some people has other sources of income to invest in. It's pretty difficult to invest if you don't have other sources to rely specially if you had just enough salary to spend with. The best way to do this is to create another income source aside for salary and that is putting up your own venture. Start with small and work your way of expanding or creating more sources from your area of expertise.
Recap
1. Know your objective of the money you are putting in.
2. Handle your emotions properly, so it wouldn't ruin your strategy.
3. Money that you need to set aside for the investment.
4. Be prepared by equipping yourself tools and wisdom in investing because it will certainly be a long journey.
5. Lifestyle changes you need to make in order to attain your goal.
6. Cashflow where your money comes from.
The Philippines has lot of potential development in the near future. Maybe most of the people don't feel it but others do. Specially if you include all the negative news about the economy.
Investing in our own country certainly helps our country to grow. When business grow it would give an opportunity for many people to earn.
On the last note. My experience in investing on stock did gave me a chance to know the big picture of what's happening in the economy. It gives me the awareness of being personally responsible for handling my finances and not blaming other people or the government. See my blog about less complaining helps.
If you're wondering for years on where to put your money aside from low interest rate in banks, you can act now and manage your own investment.
If you don't have any existing stock broker. You can always partner with my legitimate online broker.
See here How to Invest Online in Stock Market.
Photo credit to: jaya, Roberto Verzo, Peter Theony, and William Cho.
May this simple article would help you on your journey in investing. If you have any question about it feel free to mail me genpunongbayan@gmail.com and you may subscribe if you find this helpful.
Join us here in this Facebook page to get more info. Currently there are 70,000 people in the group from business owners, investors, entrepreneur and employees who wanted to learn. https://www.facebook.com/groups/theglobalfilipinoinvestors/
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- It's a step by step guide from opening an account
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