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Principles Of Investments In The Stock Market - Part 3 Of 4 |
By:
Zigfred Diaz |
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Principles Of Investments In The Stock Market - Part 3 Of 4
Zigfred Diaz
This is part three on our discussion about the basic principles of investing in the stock market. Previously, the first three principles of investment was discussed. The first principle given was that you must realize that the stock market is just another vehicle of investment. The second principle dealt with realizing that investing in the stock market is a roller coaster ride. The third principle talks about determining what type of investor you are. In this article the next 4 principles will be discussed. Please visit my blog should you wish to view the entire article.
4.) More cash more profits, but you don't need a lot to start investing. - Investing in the stock market does not require you to have millions or hudreds of thousand of pesos. My personal estimate is that you need P 20,000.00 to start trading.This is what I started with. But even if you only have P 10,000.00, you can already start trading. However that amount may be too small in my opinion. To drive the point of the above principle lets say you bought shares of Jollibee (JFC). Jollibee shares cost only 51.50 today. The board lot (the minimum amount of stocks that you could invest in) is only 100. If you calculate, you only need P 5,150 (51.50 x 100) to be "part owner" of the Philippines' number fast food chain company. Lets pretend that after 1 year the per share value of the Jollibee stocks you bought already cost P 100.00 per share, you have gained P 5,000.00 more. Imagine the profits you are making ! How much more could you have made if you invested in 200 shares ?
5.) The key to growing your investment is consistency - Don't be contented to stay small. Aim high ! Aim to play with the big players. You must have the discipline to slowly but consistently invest a part of your income to the stock market. By doing this your portfolio will grow since you have more capital to invest. I did not just stop at P 20,000.00, I slowly added to my investment. Consistent investment is a good habit to develop.
6.) You must learn to minimize your losses and maximize your profits - If your stock goes down, remember that the loss is only on paper. There is no actual loss until you sell your stock at the "losing" price. Hence the best way is to never ever sell at a loss. That is why it is important that the money that you invest in the stock market is considered as really "extra money" and not your emergency fund. If you invest your emergency fund or your savings you will be forced to withdraw sell your stock at a loss. Similarly if you sell your stocks and you profited from the sales, or you received dividends, utilize the profit or the dividend to buy more shares of stocks.
7.) Want to get rich quick ? Don't even think about investing in the stock market. - The stock market is not a get rich quick scheme. You should never ever expect to get rich overnight here. Investments always takes time to grow. If you hear about investments that give you shocking rates of return in a very short length of time, beware of those ! In the stock market, especially the Philippine stock market, it may take you several months or even years before you could say that you have made it big time. On certain rare occasions, there will be a time that it will only take weeks or days perhaps wherein you can make a killing, but again these are only rare occasions. This might occur when there is a consistent bull run or when there is an unusual going up or going down of prices within a certain period.
The diverse experiences of Zigfred Diaz makes him an excellent resource on several topics whcih he blog upon. Among the topics he regularly blogs about are management, leadership, finances, investments making money online and http://www.zdiaz.com/ investing in the stock market Check out his blog.
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Article Source: http://www.statssheet.com/articles/article65510.html |
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