Investing in the stock market is something that I do casually to make a little more money. I have no degree in finance or economics, but despite this the stock market is working out for me. Here are the top 5 things I've learned that could also help you get started:
# 5: Read up
The saying "knowledge is power" holds true when dealing with equities, so soak up on information about our economy and the world economy by reading anything related you can get your hands on. See which sectors are going up and down by following the stock market. Read the business section of the local news papers to get a pulse on the local economy. By researching, you might catch a company going public for the first time. One of the first online resources I used was the website of the Philippine Stock Exchange, or PSE as seen in the image, and it is a great place to start. Also, news about a company can really influence the way it behaves in the stock market so read up.
# 4: Focus
The stock market is filled with many different publicly listed companies, which makes it confusing to know where to start. What I did was I started reading more about companies that I was familiar with like PLDT and Meralco and I slowly worked my way through the list of familiar blue chip companies. Then I started to pick ones I can afford with the budget that I had allotted for stocks. From there, I developed a watch list. This way the amount of effort you spend researching can be better spent on the stocks you picked.
# 3: Be ready to lose
Essentially, be ready to lose the money you put in the stock market, so only use money that you are prepared to lose. Much like gambling money on tong-its or poker. There were times when I bought stocks that lost money and it doesn't feel good to lose, but it was OK because I already accepted the possibility that I'd lose money. One day the stocks you've picked can be priced very high and the next day it can be very cheap. The flip side is that a stock you got low might suddenly be expensive the very next day. Stock markets are volatile, and by continuously researching and reading it becomes easier to mitigate the chances of picking a losing stock.
# 2: Start early
The earlier the better, because overtime you start seeing trends of certain stocks. Overtime, you'd have read up on a lot of news on the companies you follow that becomes useful stock knowledge. Overtime, the money you might have lost would have already be regained though other means. On the other side of the coin, the stocks you picked might have gained a lot overtime. I remember Meralco shares were around the 50PHP mark a few years before MVP took over, now Meralco shares are priced around 250PHP each. If only I had money to buy those back then, I would that increased the value of my money by 500%.
# 1: Get a broker
Banks and stock brokers have become available online. And with the internet reaching more Pinoys everyday and with the popularity of smart phones and tablets, it's now easier to keep an eye on the Philippine Stock Exchange. My first broker was old school...I had to phone in my orders every time. Now I have an online broker and it really enhanced my experience and exposure to the stock market. My online broker provides recommendations, investment guides, daily reports and stock updates. These help me a lot when reading up on my favorite stocks. With all that information available to me, I can quickly decide and make my orders online.
It's so easy to get into the stock market. You can monitor them while at the office or while you're at home. On average, I spend about 30 minutes reading the news and checking the stock market everyday. On interesting days the time I spend might go up to an hour, but sometimes I just do a quick browse. I don't buy new stocks everyday, nor do I have a lot of money invested in the stock market (I'm not ready to lose a lot of money). With the considerably small amount of effort that I put in, it sure is paying off quite well.
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