Investing in the stock market is a profitable option. It is because it requires low initial investment, but offers high returns. This type of investment can make you millions through buying and selling of stocks. But, before you engage in stocks makes sure that you know everything about it, otherwise it can turn you empty-handed.
What are stocks?
Understanding everything about stocks can spare you from the potential risks involve. When you invest in stocks, you’ll be called as a stockholder in which you become a part-owner of a corporation or a company. Thus, gives you the rights to receive dividends and to vote the members of the board. Likewise, you’ll also have the right check the books of the company and most specially to receive the residual income.
How can you make money from stocks?
As mentioned earlier, investing the stock market is very profitable. There are two ways on how you can make money from it. One is through the stock’s price appreciation and the other way is through the dividends. However, most investors depend on the stock’s price appreciation because only few companies provide substantial cash dividends.
Things to consider when investing in the stock market
- How much money you can invest
The first thing to do if you’re planning to invest in the stock market is to determine how much money you can afford to invest. Consider your financial status and never put to risk the financial obligations to your family. This means that you should not use the funds for the basic needs of your family.
- How much to invest
You can start investing in stock market for as low as Php5,000. But, if you want to diversify your holdings, you’ll need more funds. Experts recommend that the safest way is to put at least 25% of your savings or available resources. Invest only the amount that you can afford to lose.
- Choose a reputable stock broker
This is very important to ensure that you’re not wasting your money. You can find accredited stock holders from the official website of the Philippine Stock Exchange. Open an account and submit the requirements including two valid ID’s, proof of billing, and specimen signature cards.
- Pick a stock
There are different types of stocks to invest. But, if you don’t have idea about a particular stock, the best thing to do is to invest in a mutual fund that includes various stocks.
- Place an order
Placing an order can be done by virtually if you have an online broker. After completing the order, you will receive a confirmation invoice about the details of your transaction.
Although trading in stocks can make you huge amount of money, but not all the time. There are times that you may lose money and even brokers can’t guarantee about it. The skills of the investor and the strategy employed play part on how an investor can make money in the Philippine stock market.