How to Invest in the Stock Market

learn-how-to-invest

photo from Beginners Investing

A lot of people have asked me to teach them how to invest in the stock market. I am not an expert in stock investing – far from it. But I do know how to do it. Investing in the stock market is not rocket science (I’ve always wondered how hard rocket science really is). It’s very simple. And if I can do it, so can you!

I started investing in the Philippine Stock Exchange (PSE) 3 years ago. And while I have not become an instant multi-millionaire because of it, I have gotten good returns on most of the investments I have made. The reason why I started investing in the stock market was because I read Bo Sanchez’ book “My Maids Invest In The Stock Market”. Fast forward 3 years and now, one maid as P308,388 in her stock market account. The other has P176,465. Can you believe it? If you don’t believe me, you can read Bo Sanchez’ full article: My Maids are now Richer than many Managers.

The stock market is a long-term investment. Once you put your money in, you shouldn’t take it out for about 20 years. Yup. I’m totally serious. I think of it as my retirement fund. When I share that to people, they often give me surprised stare and say something like, “Aren’t you too young to start thinking about retiring?”

I beg to differ. It’s never too early to invest for your retirement. The earlier you start doing it, the better for you! My partners and I in Truly Wealthy Realty all started investing at around the same time. And we still invest up to now. Investing in the stock market is not a one-time-thing. In order to maximize the market, you have to do it regularly. Like clockwork. This is NOT a get-rich-quick scheme. It’s actually a get-rich-slow scheme. It’s slow, but sure. If you want to get rich quick, buy a lottery ticket :)

For those who want to start investing in the stock market, here is a simple step-by-step process to start doing so.

Step 1: Know the basics. A stock is a piece of ownership in a corporation. When you buy a share of common stock you are buying a part of the business. For example when you buy shares of Ayala Land Inc (ALI) you will be called a stockholder or shareholder of that company. The percentage of ownership depends on how much stock you own. When the company earns, you earn. Every time.

Step 2: Find a mentor. The stock market is a dangerous place for those who don’t know what they are doing. Yes, you can make money. But you can also lose money there. There are thousands of stocks available in the PSE, how will you know which ones to buy? Answer – through your mentor. If you want to succeed in any field you will get there twice as fast if you have someone who’s already been there guiding you. You’ll make less mistakes and make guided and informed decisions. My mentor is Bo Sanchez. He guides me on what stocks to buy, when to buy and when to sell. No, I don’t have coffee with him while we chat about the stock market (I’d love to, but he’s based in Manila!). I simply subscribe to his Truly Rich Club site. It’s only P499 a month and we get stock advice every month. For those who don’t want to subscribe, that’s no problem. But it is important that you find a mentor to guide you.

Step 3: Get moving. You can study and research about the stock market all you want but the only way to really learn is by doing it. No excuses. You don’t have to be a millionaire to invest in stocks. In fact, all you need is P5,000! To invest in the Philippine stock market you need a broker. I use an online stock brokerage firm in the Philippines – COL Financial 

It’s convenient and it has lower fees.

You can also invest in the PSE thru other avenues such as First Metrosec or BPI Trade. You can also invest through a stock broker.

5 Steps to Opening an Account at COL Financial:

  1. Log on to COLFinancial.com. Go to COL Financial.com and download an application form.
  2. Fill it up. Fill up the application form
  3. Mail it. Mail it to their main office in Manila along with the other requirements
  4. Fund your account. Once COL Financial receives and approves your account (3-5 days), a personnel of COL Financial will contact you and tell you that your account is now ready for funding. That’s where the P5000 comes in. You can then go to the nearest bank and deposit the money to COL Financial with your reference number. After that, fax the receipt and wait for your account to be activated.
  5. Start buying. Once your account has been activated, you can now start buying!

There are two types of investors: traders and long-term investors. Traders buy and sell everyday and watch the market like hawk. Being a trader requires extensive experience and knowledge of the market and the company you’re investing. I am more of a long-term investor. I buy stocks of blue chip companies-companies that are solid and have a good chance of being here 50 years from now. Examples of such companies are Lafarge, Jollibee Food Corp, Cebu Pacific and Aboitiz Power.

Long-term investors buy regularly regardless of whether the market is down or up. Time frame is around 20-30 years. COL Financial has an easy investment program that uses the cost averaging method of investment. The idea is to invest regularly to take advantage of the power of compounding. For example you invested 1000 in Ayala. By the end of the year, Ayala grew by 10%. So your money now becomes 1100. If Ayala continued to grow at 10%, your money will become 1210. So the interest gets added on the principal and that starts earning interest. That is the power of compounding. It makes your money grow faster.

When it comes to investing in the stock market, time is your ally. Through the power of compounding, the earlier you start the bigger your gains will be. I don’t claim to be an expert in stocks, I have much to learn. But I am sharing this with you in order to inspire you to take your financial future into your hands and start NOW.

What are you doing for your future?

Go live a Truly Wealthy live!

-Alex

2 Comments on How to Invest in the Stock Market

  1. PatriciaSl
    January 17, 2015 at 7:37 pm (2 years ago)

    I love reading a post that can make men and women think. Also, thank you for allowing me to comment!

    Reply
    • Alex
      January 20, 2015 at 11:58 pm (2 years ago)

      Your welcome Patricia :)

      Reply

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