About Investing: Stock Market Made Easy

WARNING: Do not read this post if you're not interested. The reason why I did this is for my many OFW friends and acquaintances who somehow show interest in entering investment opportunities back home. But if you're willing to risk your time soaking into it, might as well help you in deciding when and where to invest your money. After all, it has something to do with your future.

Basically, this blog entry all about stock market aims to inform, to educate and to encourage those who would want to enter into this field not having the much needed financial knowledge of how it works.

I am no expert and won't claim to be one as I, myself, still has limited exposure (for now) in this broad financial medium. Currently, I'm still doing my further study with all the available financial literacy utilities online, making use of my available time to become financially literate soon. Perhaps, I may say that I got a slight advantage compared to others because I earned my degree in business. But, I tell you it isn't hard as you may think. One must only open their minds in order that idea would easily be absorbed.

What I just want to share here is just few of the basics that one must know before entering stock market. 

Let's go back to the idea, that at the end of the day, stock market is all about businesses. It's business, business, and pure business. People go into the stock market to raise money. 

But before I go along, let us discuss first the common myths when it comes to stock market. Few of the biggest reasons whey people do not invest are because:

1. "THEY ARE SCARED" - They just don't know what it is and how it is. 

2.  "THEY LACK THE PROPER KNOWLEDGE" about it. It is because when they know what it is, it gives them conviction and confidence to put their money into. 

Well, stock market wasn't taught in school, neither by our parents. The fact is, we can't blame our parents because they can only teach what they know, they can only give what they have. So, with insufficient knowledge about it, they don't discuss it with their children. As a result, their children stay ignorant all about it.

It is exciting to see a new generation of young Filipinos who are well informed financially and are much literate money wise than before. So, there are certain dynamics in order for one to break in to the stock market. 

When you say it's gambling, you're putting your money into something that has a 50-50 chance of making profit or even lesser. YOU ONLY GAMBLE WHEN YOU DON'T KNOW WHAT THE FUTURE BRINGS. 

"Investing in the stock market is putting your money towards established companies that are sure to be around for decades." 

That being said, it is your due diligence as an investor to study the market to make better and sound decisions. There are certain companies that outperform other companies. There are those companies as well that only gain minimal profits. Stick this to mind, the stock market is not as hard as people may think. Also it is not as easy because you need to put a certain amount of effort in studying it. The more you study, the more you prepare, the better decision that you'll make. 

So let's dissect how one can EARN in the stock market: 

1. Through CAPITAL APPRECIATION - Buy a stock at a lower price - then if the price goes up overtime - sell it on high - you gain profit (or make money - that's so called "actualizing your gains". One of the biggest misconceptions is that "You buy a stock and it goes down, you lose money right away." It is WRONG! The loss that you see online is only called 'PAPER LOSS'. Actual loss only happens when you buy a stock at a higher price and the next morning or after a week the price goes down and you liquidate your stocks by selling it lower than the price when you buy it - that's the REAL LOSS. But as long as you do nothing with your stocks, nothing will happen. But what's good when market is down, it is an opportunity for you to tap-up your investment by buying more stocks at lower prices. Once the market performs better, your loss will be off-set because prices are going up. With that, you stocks will accumulate profits.

2. Through DIVIDENDS DECLARATION - A lot of companies in the PSE declares dividend. It is so wise to choose/buy stocks from companies that aside from being solidly established, declares also dividends. Dividends has nothing to do with market sentiments BUT it has everything to do with how profitable the business is. Profitable companies, most often than not, declares dividends. 

Now, once you're convinced and decided to enter the stock market, the question now that would linger in your mind is this: "How Do I Start?" 

People must realize and should bear this in mind. If you study initially and build a good foundation, BUYING STOCKS WILL BE EASY. 

"The road to investing in the market starts by educating yourself about it." 

Some people, they tend to study and they buy stocks and monitor it online everyday (like what I did before) because there's this uncertain fear by thinking "they don't know what's gonna happen". But if you spend a certain amount of time building the right foundation, building the proper skill on how to do things - buying stocks just becomes something that you just execute. It's like executing on something that you already know.

Once you build your knowledge, pick a broker. The broker is your gateway. At the end of the day, a broker is your tool for you to be able to go in and out of the market. You cannot buy and sell stocks in the stock market WITHOUT A BROKER. In my case, I trusted COL FINANCIAL PHILIPPINES (formerly known as CITISEC ONLINE. COLD FINANCIAL serves as my online broker. It is easier nowadays to enter stock market because you can do your transaction online. You don't have to hire a personal broker to do stuff for you. You can monitor your account via online. You can find list of accredited and/or certified BROKERS by visiting PHILIPPINES STOCK EXCHANGE website. 

In addition, for newbies, the things that you need to study in order that BUYING STOCKS become EXECUTORY is that when studying, you need to cover all your bases before going into it - that is - have that emergency fund in place - meaning you don't invest emergency funds. Another, start with money that you don't need on a daily basis. When you are aware that you'll start your stock market journey with excess money that you don't need, it gives you more confidence to dive in. Start with amount that is tolerable with you. 

And for newbies, as I have mentioned, GO WITH THE BIGGER COMPANIES THAT YOU KNOW WILL BE AROUND FOR A LONG TIME. 

Lastly, invest conservatively when you're just starting it out. There are basically a number of tools and a number of financially literate persons that can help you while you build your confidence in the stock market. 

Let us invest for our future. Don't be too afraid, take a risk but be sure it's a tolerable risk - one that your stomach can allow. 

Now, after reading this, you feel you're interested, just buzz me in and I will share with you what I know. Let's start with the basics.

P.S. credit to some of the ideas from the "On The Money" segment in ANC