I have been investing in the stock market for more than a year now. That’s not long enough for me to give out advice on what to stocks to pick or how to grow your money ten-fold. Don’t expect that on this post. What you can expect, however, is where to start and some other tips that I wish I’ve read before taking the plunge in the greatest investment I ever made. With all that said, let’s start!
Get smart! Read about the Stock Market
Before anything else, it is important to know what you are getting yourself into. Read as much as you can on the stock market especially on its risks and benefits. If you ask me, the stock market is the best investment I made BUT it has its costs. Your money can really grow but it’ll take time and its risks are too high if not done correctly. You should also compare the pros and cons of investing in the stock market versus other options like mutual funds, bonds, etc.
Know your risk profile
If after reading about the stock market and you feel confident about investing, the next most important thing you have to know is what kind of an investor you are. You can easily find risk profiling tests online. Here’s a basic one from Rappler but I took mine from the BPI ALFM website (or if you have BPI Express Online, there’s a tab for investments where it’ll link you take the risk profiling test).
Your risk profile should guide you in determining your plans or goals for investing.
Have a plan and know your goals
After knowing the basics, it is very important to create a plan and know your goals. It doesn’t have to be detailed. It can be vague but it must answer some basic questions like:
- How long do I plan to invest in the stock market?
- How much can I initially and invest and how much am I willing to add regularly?
- What are my expectations?
- How much am I willing to lose?
This step is important because you are now managing your expectations and you are creating limits for yourself. I feel this is important because, from experience, it is easy to let your emotions control your investments especially if you see your stocks gaining or losing.
Too much information can be bad
As you start your journey in investing on stocks, soon enough you’d find yourself reading and asking about it endlessly. This is normally good but it’s a two-edged sword. It’s natural to get as much information as you can. This will arm you with the knowledge that you’ll need but believe me, it can also overwhelm you. Worse case scenario, you have all this knowledge but you’re still where you’re at – the starting point.
As for me, I skipped most of the tips I wrote down, lol, and jumped right into the world of stock market. As they say, experience is the best teacher and it taught me a lot.
There are different strategies for investing in the stock market but it would mostly depend on your money and time. Always put that into consideration when picking a stock and also try to be mindful of the following lessons I’ve learned:
- Always remember that the more you invest, the higher the returns. Try to pick stocks that are cheaper so you can buy more stocks even if you only have 5,000 pesos.
- Buy low, sell high. It’s not the other way around guys! BUT if you plan to use averaging as a strategy for your investment, this wouldn’t matter that much.
- Blue chips are the safest way to go especially if you are investing for the long term.
- There’s this called fast trading (or that’s what I like to call it) where you invest in companies whose prices swing a lot. Be mindful of your risk profile before even considering this. (I tried it and I had the worst experience ever. DON’T DO IT.)
- Everything takes time. Prices don’t just change in a day. Some take weeks or even months. Remember your plan and execute it!
- Always pursue more knowledge. There are tons of free sites out there that can guide you but remember that too much information can be bad. You must learn how to filter the information that can help you.
I hope somehow these tips can help you and push you in the right direction. To be honest, I did lose a lot of money during my first year but since 2017 has started, things have been pretty good because I created a plan for my stocks (see tip above) and made sure I stuck to it.
If you arm yourself with a right attitude and continue your quest for more knowledge, hopefully, things will go smoothly. I hope this helps you in a way and if you have any questions at all, I’ll try to answer it. Or if you want a more detailed how-to on investing I’d be glad to write about it.
Be safe and go invest!
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This post was written for Jolens. I pray that this helps or inspires you, lol.