FFE Magazine

The Fundamentals of Investing in the Stock Market

 

 

Learning the ins and outs of the stock market is very important because, once you understand everything there is to know about it; you can manage your investments better. But before we go there, let’s see why people should try it out.

 

Why Buy Stocks? 

 

There are several reasons why it is wise to invest in stocks.

 

First of all, you get a lot more from investing in stocks rather than putting your money in the bank and waiting for its interest to grow. According to experts, one can even earn up to 50% of what was invested in stocks in only 24 hours.

 

Second, investing in stocks will be a great help to the country’s economy.

 

 

 

 

Third, and this is very much related to the second reason, the Philippines’s stock market has been performing amazingly well. Investing at this point in time would be very lucrative and quite safe for every body with a little knowledge of the stock market.

 

Read and do your research well

 

Stock Market 101 

 
Most Filipinos think that the world of stocks is just too complicated. But give yourself a chance to understand it and maybe you’ll start earning big as well. Let’s begin with some of the most basic terms.

 
Ø  The stock market is the ‘place’ where securities are sold and/or bought.

 
Ø  Asset is anything of value in an exchange.

 
Ø  Share is a certificate which represents company ownership.

 
Ø  A shareholder is a person or an entity which has shares in a company.

 
Ø  The stock broker is duly registered to execute customer order (buy or sell) or acts as the ‘middle man’ between the buyer and the seller. They are often paid on commission.

 
How Is This Done? 

 
First of all, you need to study your profile first to decide how much you can invest. Make sure that you have an emergency fund – this is the money which you do not invest but spend for living expenses.

 
Next, speak to a highly reputed stock broker and open an account with him or her.
Once that is done, you can start choosing what stock you want to invest in.

 
Finally, you can place an order. Now, all you need to do is hang on tight. Don’t get spooked to easily because, if you did your research well, you should be confident about your decision.
If you don’t want to go through all that trouble, you could invest your money in a financial institution (e.g. bank investment) and let them do this for you.

 
Experts believe that at the moment the Philippine stocks are growing constantly, thus investing in stocks is way better than investing in real estate. Of course, investing in stocks have a lot of risks too just like any business venture, therefore to reduce the risks you need to study the profile of the company whose stock you want to buy very carefully.

 
Some tips if you have decided to invest in stocks.

 

You need to first find out  and decide the branch of business you would like to invest in, is it IT, real estate, food, or pharmaceutical. Listen to experts, read the news and have your ears and eyes open to find out which branch of business has lately been doing well in the stock market.

 

You also need to decide whether it should be long or short term investment you like to venture into. Most of the time, the short term investments are the riskier, but are the ones with higher yields. It is better to have both- long term with less risks and short term stocks with higher risk in your portfolio.

 

Try to spread your investment portfolio so that you invest in stocks of several different branches of business, so that if one branch is not doing well you will be earning from those that are doing better.

 

Lastly, investing in the stock market is also about gut feeling. When buying any stock, aside from reading about the company whose stocks you want to buy, listen to your stomach, if you feel good about it then go for it, because at the end of the day investing in stocks is a gamble. However its not like gambling in a casino. Just like mentioned earlier it is a business venture and all business venture have risks.

 

This man doesnt seem to have done his research

 

But one should also realize and understand that venturing into stocks has good prospects for lucrative returns and just like any business venture you just need to arm yourself with good knowledge, skills and discipline to succeed.

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