An Equal Opportunity for Wealth
I started investing in the Philippine Stock Market in 2015. Before that, I had heard of the stock market, but was never really interested in it. But after careful studying, I realized that it is a powerful tool that creates opportunities for regular people like you and me to create wealth.
What is the Stock Market?
Basically, the stock market is where business offer a small part of their company- called stocks or shares- to the general public. By buying the shares or stock of a company, you instantly become a shareholder of the business. Shareholders can enjoy certain benefits in the growth and profits of a company.
How do I earn money in the Stock Market?
By investing your money in stocks, you become entitled to the growth of the company you have bought into. When the company grows, they can pay out some of the profits to the shareholders in the form of dividends. Dividends can come in two types: Cash (free money!) or Stock (Additional shares).
Much like the interest you gain from the bank, the amount will be credited to your stock brokerage account on the specific dates that a company declares its dividends.
The increase of Ayala Land Inc.'s Share Price from 2012- Dec. 2017
Another way to earn money is when the value of each share or stock increases over time. This is called capital appreciation. This can be caused by several factors such as the growth of the company, better earnings, supply and demand, and much more.
The better the sentiment of a certain company, the higher investors are willing to pay for its shares. The difference between the price you bought your stock for and the price you sell it will be the amount you will have earned from that certain stock.
Why put money in the Stock Market?
There are many reasons why the stock market is a good place to park your money. Compared to placing your money in a bank savings account, a good dividend-paying stock from a reputable company would pay much higher amounts ( can be as high as 5% or more) than the interest in most banks today (0.25%-1%).
The stock market could also be your way of saving for your wedding or that dream car or home. For others, it could be a second source of income. Stocks have historically been the best performing asset class, and can be a good way of saving for retirement as well.
Whatever your financial goal is, the stock market can be an excellent way to make your money grow over time!
There were days were I gained 5 to 6k in my small portfolio when I first started investing, and there were also days I lost just as much. Before we jump in the hype, we should first know what the stock market is and what we are getting into. We should know the reason why we are investing and also how to invest wisely. Without the knowledge, it would be no better than going gambling in a casino.
Once you're ready, go open a brokerage account and you're all set to make your first transaction in the stock market!