3 Important Reminders in investing in the stock market

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Credit: Pixabay

By: MJ Gonzales | Executive Chronicles

Thanks to available reading tools and video tutorials, investing in the stock market is not an alienating thing for wealth creation.  Despite of this, it seems that it’s not as popular as the other investments. According to Philippine Stock Exchange’s (PSE) survey, the number of Filipino Investors is still below 1 million or not even 1% total population of the country as of September 2015.  To give you an idea what you should expect, here the few notes about investing in the stock market:

  • Recommended for OFWs and regular employees– Similar to time deposit, investing (not trading) in the stock market grows your money given that you put it there for certain period of time. However, it’s better when it comes to interest rate and when you buy shares from reputable company.  Furthermore, it’s also something you can do without leaving your day job and business also known as portfolio investment or passive income.
  • Better than other kinds of investments –“ Raising Pinoy Boys and The Retelling of The Richest Man in Babylon” author Rose Fres Fausto wrote on Philippine Star that buying stocks is better than purchasing gold and parcel of land because their values will stay the same even you get old. Base on her husband’s idea, Fausto explained that you can earn in parcel of land only if you use or develop it for commercial purposes. On the other hand, its square meters size will always be the same unlike the price of shares ( or equities) companies’ stocks
  • Credit: Pixabay
    Credit: Pixabay

    Need to understand and counter its risks. Given the promise of better rates and benefits, investing in the stock market will not spare of you from financial risks. When you see your stocks are earning well, it’s tempting to buy more to yield more. It’s not advisable especially if your risk profile says you’re not aggressive and buy the wrong stocks. Apart from these, putting 100% of your money in equities is dangerous. According to Investopedia’s report, circumstances such as “market crashes,” “inflation,” and “deflation” would melt your earnings.  In fact, even powerful countries like Japan and U.S. also experienced severe market crashes so be well prepared. Thus majority of financial experts recommend to choose diversification.