Stock Market Basic Principles – Part 1
Several people have inquired from me whether they should invest in the Philippine stock market. They also wanted to know how to begin doing it. I am not sure know if they are really seriously asking the question. They might be just curious about the stock market considering that it has been always in the headlines lately. This is brought about by the fact that it is at its highest levels since the beginning of its creation.
Investing in the Philippine stock market is not for the faint hearted. As an investor you must have expectations as to how much you are going to earn for a certain vehicle of investment. Such is expectation is measured in terms of how much your money will grow at a certain period of time. (Most usually this is measured in interest per annum) Because the Philippine Stock market is in its all time high for several months now, people think that they should join the band wagon. They do not even understand the basic principles involved nor do they understand how the stock market works. I am not saying that you should be an economist before you should invest in the stock market.
The point I am making is that you should understand the basic principles first before you will be successful in the stock market. It is true that fortunes are made on the Stock market, however there are also stories of people loosing a large amount of their money. Other who just dive into the stock market without knowing the basic principles of investment quit after some time, telling themselves that the stock market does make any money for anybody.
Before I would even begin to tackle the ins and outs of the how to invest in the Philippine stock market you should first understand the basic principles of investment in order that you might enjoy trading and possibly succeed in the stock market. I will be discussing ten of them. We will discuss the first one here. The other points will be tackled on coming articles. If you wish to see the entire article please visit my blog.
1.) Its just another vehicle of investment – The stock market is just another vehicle of investment. There are other investment vehicles where you could invest your money. They have their advantages and disadvantages. One vehicle of investment is not more superior than the other. However this will not be discussed in detail here.
In economic parlance, the stock market is categorized as belonging to the “Capital Markets.” Even in the Capital market category there are different types of investment vehicles. You have several alternatives here. Aside from the stock market, you could place your investment in pension funds, bonds, insurance, real estate, time deposit accounts different types of savings. It is important to know this because it will help you determine whether or not you should invest in the Stock Market considering that there are other alternative vehicles of investment in the Capital markets.
As I said each of them has their own advantages and disadvantages. What I personally did is not to place all of my eggs in one basket. I have invested in most of the Capital Markets including the stock market, insurance, pension, deposits, and bonds through mutual funds.
Would you want to know more about investment strategies ? Visit the blog of Zigfred Diaz where he blogs about several interesting topics such as investments, financial management, business, making financial online and Stock market investing
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