Stock market myths: What keeps you from investing
Over the past few years of doing financial consulting, I've encountered different types of people from different walks of life all eager to start saving, budgeting and make their money work hard for them.
We talked about different ways to save and different avenues where they could invest.
However, when we talked about the stock market, I noticed that many of them were hesitant. When I asked them why, they cited the following reasons:
- They thought they had to watch their stocks everyday,
- That they need millions of pesos to invest, and
- That putting money in the stock market was gambling.
These are some misconceptions that have prevented people from investing in stocks for years. I'm telling you, these are not true.
I believe the stock market is one of the greatest equalizers that give Filipinos a shot at being part of the growing economy. Why?
Let me break it down for you.
In essence, the stock market allows you to be a partner and a shareholder in the biggest companies in the country.
How can it be gambling when you're placing money in companies that are not just profitable, but have stood the test of time? In a booming economy, as companies continue to earn, their stock prices follow and give out consistent dividends. You, being a shareholder, will be part of that growth. It's not like gambling where you roll a dice, wishing you'd hit the jackpot.
You also don't need to watch your stocks everyday. Great companies will run by themselves without your inputs. Over the past 5 years, we've seen majority of the blue chip companies more than double or triple their stock prices.
Now is the stock market just for the rich? Think about it this way: if you're an entrepreneur and you want to start your own fast food chain like Jollibee, it will take you millions of pesos and years of trial and error to come up with a winning formula and turn your business into a profitable one.
The stock market allows you to be an owner of such company, but in the cheap way. Let's say the stock price of Jollibee is P165 per share and the minimum number of shares to be able to invest in the company is 10.
How much would that cost? 10 shares x P165 per share = P1,650.
For P1,650, you can become a part-owner of the largest fast food chain operator in the country.
Is that expensive? Not at all! Some people even spend more eating in their favorite restaurants during the weekend.
That’s right. You don’t need to be a millionaire to invest in stocks. You just need to buy the minimum number of shares, called the board lot, to participate in the growth of a big company.
The stock market allows you, wherever you may be in your life, to make your money work for you.
Watch out for my next piece on what to consider before investing in stocks. – Rappler.com
Marvin Germo is a registered financial planner, an author, personal finance consultant and a stock market trader and investor. He has around 7 years of experience in the Philippine financial industry. He specializes in technical analysis and position trading. Read his blog. Follow him on Twitter: @marvingermo
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