Why You Should Invest into the Stock Market

analysis-227172_1280

 

Ever since I posted about stock market in my social media accounts, a lot of my friends and relatives are asking about stock market, my investment, if stock market is a good source of income, if you need a big capital to get started and the list goes on. 

In order to explain my stock market experience clearly and not tell it to everyone over and over again, I decided to create this blog.

Aside from family and friends, I can help also everyone else who’s interested to invest in the stock market by visiting this site.

I also post other financial literacy-related topics in this blog, not only to document my journey but to share this also to those who need help.

When I discuss stock market, most people are confused and don’t understand how to start. I’ve been there before so I will try my best to explain it step-by-step based on my own experience.

Do you feel that the stock market is only for the rich people?

Do you think that you’re “OP” (out of place) when you enter the stock market?

Do you think you are not qualified to start investing because you are just a regular human being?

If yes, we had the same thinking, until I read one of Bo Sanchez’s newsletters about stock market and his mini eBook, My Maid Invests in the Stock Market, And Why You Should, Too.

If you still do not have a copy of the book, please click the book image in the upper-right side of this site or subscribe button below to download it for free.

When I read the book, I felt enlightened at the same time liberated because the unreachable stock market is now within my reach. It gave me hope that even I do not have a big capital I can start to act on my dream, to become financially free.

I really recommend reading that book first. That’s where I started. It helped to eliminate my doubts and fear about stock market investing.

In Bo’s next book, The Turtle Always Wins, How to Make Millions in the Stock Market, he discussed the different kinds of trader and investor in the stock market and why we should follow the turtle’s strategy.

The following information is the summary of the book.

The Turtle Always Wins (How to Make Millions in the Stock Market)

Income does not Equal Wealth

“Income does not equal wealth. It’s not how much you earn that makes you wealthy. It’s how much you invest from what you earn that makes you wealthy.”

There are so many managers that have high salary who are living from paycheck to paycheck. Yes, they also save money but not for investment or for their retirement but to save for big expenses to buy gadgets, TV, wardrobe, expensive vacation and so on.

They forget to plan their retirement just like the story of Lola Penny in Bo’s book.

Most of them depend on the retirement package from their employer. Retirement package is in millions also but if not spent properly, they will vanish in just a year.

According to surveys, only 2% of people aged 65 and above are financially free. The rest (98%) depend on their kids, or on their tiny pension, or on charitable institutions or they have to keep on working – otherwise, they have nothing to eat.

Unlike Lola Penny in the story, Lola Pilar reached her retirement age without depending on her children financially because since 1966, she invested her small separation pay as cashier in the stock market. If they have extra money, together with her husband, they add it to their investment.

When her husband retired at the age of 65, they sold a portion of their investment little by little for their expenses. Until his husband died, she still had millions in the stock market.

By the way, it’s a true story. Lola Pilar is Bo’s mother.

Don’t Borrow; Start Lending

Unless the purpose is for business, borrowing money is not a good idea especially if it will be spent for living expenses and worst for luxuries.

Instead of borrowing, start lending.

Most of us have savings accounts in banks. That’s one way of lending your money but not the best way to earn.

Banks give their depositors tiny interest of less than one percent a year only. Not only that, tax will be deducted also from the income and whatever you earned from bank deposits would be eaten by a monster called inflation.

Bo described it as simple as this, “Inflation means what you can buy with Php1.00 today will cost you Php1.05 by next year. Because the purchasing power of money decreases over time.”

Instead of banks, lend your money to others who can give you a higher return like investing in giant companies through stock market.

If you really love to invest in banks, buy stocks of BPI, BDO, Metrobank or other giant banks that can give you higher return than the tiny interests from your bank deposits.

You can invest indirectly into the Stock Market via Mutual Funds

If you want to invest in the stock market but not directly and just want someone to manage your funds, invest in mutual funds or UITF.

Most giant banks, as well as insurance companies, offer that service in exchange for management fee. Just inquire about it in their customer service department. Better if you can inquire personally.

My siblings have UITF accounts in BPI and according to them, they are happy about the return, which is good for starter.

I haven’t tried mutual fund/UITF yet since I’m investing directly in the stock market. Also, I have a trusted guide to earn more by investing directly, which I will discuss in my next posts.

There are different kinds of mutual funds enumerated in the book.

  • Equity Fund – money is invested in the stock market.
  • Bond Fund – money is invested in Philippine government bond. A bond is simply a piece of paper from the government with words ‘I owe you’ written on it.
  • Balanced Fund – money is invested in both the stock market and bonds.

In my next blog post, I will share the four kinds of people in the stock market.

You will find out why “The Turtle Always Wins” by directly investing in the stock market.

Want More?

Subscribe to our newsletter to receive stock market updates, seminars, giveaways and other financial literacy-related topics.

As a bonus, you’ll receive Bo Sanchez’s “My Maid Invests in the Stock Market” short eBook for FREE.

Click here to Subscribe

Leave a Comment