INVESTING in the stock market is a great way to build wealth over the long-term. But a lot of people still ignore the idea of putting their hard-earned money in stocks primarily because they lack the necessary knowledge and are afraid of risks.
Many still think it’s too complicated, too risky, that it’s only for the rich, for analysts, for people good in math, those with insider connections and people who are glued to their screen watching the green and red numbers move from left to right.
But, no. These are all misconceptions misconceptions on stock investing.
In principle, stock investing is buying shares of publicly traded companies. It allows investors to become shareholders of some of the biggest conglomerates in the county today, the likes of Jollibee, SM, Ayala, Megaworld, Globe, PLDT and GT Capital, among others.
Stocks can grow in value over time, providing investor with returns that may be higher than what bank savings instruments can offer.
Another compelling reason to invest is that the stock market is naturally poised for growth. Studies have shown that the stock market is one of the best long-term investments available in the market today because of its immense wealth opportunities.
In an interview with SunStar Cebu, Marco Nino Velasco, stock broker at Maybank ATR Kim Eng Securities, shared key guiding tips in investing in the stock market.
Velasco is also co-founder of the Cebu-based Wealth Club, a group of Cebuano investment enthusiasts and stock brokers.
What should I do before investing my money?
The very first thing that people should do is to acquire the basic knowledge about the stock market. There are a lot of free materials online. Going further, they can (better yet should) also join free orientations conducted by stock brokerage firms and the Philippine Stock Exchange. There are also paid seminars about stock market investing which they can join.
Generally, people must have the basic knowledge about the stock market before they start. Lack of knowledge is one of the reasons why people lose money in the stock market.
What are the opportunities in stock investing?
Investing in the stock market is a great way to make wealth. You can make money in two ways: capital appreciation and dividend income. Capital appreciation is when stock prices go up. Dividends are part of the company’s income that is being shared to its shareholders. One great thing about investing in the stock market is becoming (instantly) a shareholder of large companies with very minimal hassle (paperwork, etc.).
What are the risks?
The biggest risk is the risk of losing money. Stock prices go up and down. You can lose money if the price drops. The risk is enormous if you invest with insufficient knowledge.
One way of mitigating risks is to start small. Only invest more once your knowledge and experience increase. Success in trading has a lot to do with your knowledge and experience.
Why many people are not so interested in the stock market?
One big reason is lack of knowledge. People don’t know how. People don’t even know how to start. Also, people have the notion that the stock market is risky (which it actually is), raising fear. Lack of knowledge plus fear keep a lot of people from investing in the stock market.
These can be addressed if there are abundant learning opportunities as people are seeking ways to make their money grow even more. The good thing actually is with online brokers, more people are starting to get into the stock market.
But generally, the market is still virtually untapped.