First, what is a market? Well, there are two ways of looking at it. A market is a place where you can go buy goods like rice, fish, fruits, etc. That is from the perspective of a consumer or buyer. From the perspective of a vendor, a market is place where you can sell stuff.
Basically, two things happen in the market: buying and selling.
Stock market is also like a regular market except that the goods are not rice, fish or fruits. Instead people go to the stock market to buy or sell stocks.
A stock is a share of ownership in a corporation. For example, you bought 100 shares of Jolibee Food Corporation (JFC). It means that you are part owner or shareholder of JFC.
Just because you are part owner of Jolibee doesn’t mean you can just go to any Jolibee store and demand free Yum Burger!
Why? Well, you’re just part owner! You don’t own it 100%. Of course, the other owners won’t allow you to do that. Besides, if all owners do that, you think any business can survive?
3. How to make money in the stock market?
There are two ways to make money in the stock market: Price Appreciation and by earning Dividends.
Price appreciation is an increase in the market price of your stock over time. How will the price increase? Well, there are several factors. One is due to supply and demand.
Have you noticed that the price of fruit salad ingredients are much higher in December than in June?
It’s because of supply and demand. People tend to be making a lot of fruit salads in December than in June! I wonder why… Duh…
How about dividends? Let’s simply put it extra profit of the company. That extra profit is distributed to all shareholders.
4. Why should I invest in the stock market?
It’s one of the best instruments to grow your money to beat inflation. What is inflation? In simple terms, inflation is the price increase of primary goods.
My grandmother used to tell me that when she was young, for a hundred pesos, they can fill up to the brim of a basket with two kilos of rice, one kilo of fish, vegetables, fruits and other goods from the market. Last Sunday, I bought a kilo of fish at 300 pesos.
Yeah! You can beat inflation by investing in the stock market.
The inflation rate in the Philippines ranges from 1% to 6% per year.
If you’re going to put your money in the bank, it’s as if you’re letting the bank eat your money. Most banks give an interest rate of less than 1% per year. Seriously? With inflation, your money loses its original value.
Another reason to invest in the stock market is that stocks can compound the value of your money.
In what way?
Well, big companies are in it for the long term. They wan to get the maximum profit. In order to do that, they reinvest their initial profits so they generate even more profit. As a shareholder, you also benefit from that profit.
5. What is the best strategy for an ordinary Filipino?
The best strategy is learn before you earn!
There’s a reason why until now, majority of Filipinos do not invest in the stock market. Studies show that less than 2% of the population invest in the stock market.
It’s because of fear. People are afraid of losing money in the stock market. People are afraid in general. Who isn’t?
The thought of investing in the stock market scares them.
If that’s you, I have great news!
Stock market is learnable.
As Warren Buffet said,
“Risk comes from not knowing what you are doing.”
Learning stock market or knowing how it works is the cure to your fear to get started in the stock market.
And when is the best time to start investing in the stock market? Ten years ago!
When is the second best? Today!
How often should you invest money in the stock market? As often as you possibly can! Just do it regularly. And do it long term.
I’d like to invite you to a half-day seminar on August 25, 2019 in Isabel, Leyte!
I invited Mr. Bryan Clamano, one of the sought-after trainers from IMG Wealth Academy. He’s also a stock market investor and trader.
Time: 1 PM – 5PM
Venue: To be announced later
Registration Fee: P200 (inclusive of snacks)
We’re only accepting up to 50 participants. If you’re interested, please reserve a slot now.
Franklin Vios is an author, public speaker and millennial father. He’s also the founder of Phil Design Academy.
He is an affiliate of Bo Sanchez’s Truly Rich Club. He’s one of the resource speakers for the Overseas Filipinos Summit 2018, the biggest online gathering hosted by Asia’s Writing Coach, Sha Nacino.
As a financial literacy advocate and Marketing Director at International Marketing Group, he is passionate in helping people who are stuck in taking the first step to growing their finances.