Monday, 25 February 2013

MONEY MATTERS : 5 BEGINNER'S TIPS (WHEN INVESTING IN STOCK MARKET)

Try not to mind paper gains and losses.
It's all in the paper (translated, not real, yet)

TRY being the operative word! A paper gain or loss is the increase or decrease in value of an asset, e.g., a stock or other investment. It's called a "paper" gain because it appears as profit or loss on paper, i.e., on a statement (even if the statement is on a computer screen), but it is not a real gain or loss until the asset is sold. (Source). 

I guess majority of beginners (me, counted) will initially develop a habit of checking if their portfolio (pinagsama-samang stocks) did well for the day. It kinda brightens my day on some and ruins my day on other. HA! This is the CORE reason WHY you need to invest on a company that you believe in. Do you honestly believe that SM will close down next week? If not - never mind the paper loss today and focus on more productive tasks at hand.

Timing.
"The early bird gets the worm, but the second mouse gets the cheese.” 

This tip is not a sure-fire tip. All I can say is that I've learned it by experience. Very simple:
Buy stocks after lunch, sell them before lunch. I don't know if it's generally proven, but heck! I've bought shares of stocks at around 10 am-ish (price per share is Php113), I checked the rate after lunch and to my surprise, price went down to Php110. ACK! Makes a lot of difference if you're buying significant number of shares. I should've waited! This leads me on my 3rd tip.

Patience.
“Patience is waiting. Not passively waiting. That is laziness. 
But to keep going when the going is hard and slow - that is patience.”

Case in point: Stock gain of your friend is not (automatically) your gain too. Remember she bought it when the price was low, and now its current value is high. If you're buying shares of stocks now, 2 possible things may happen. It's either the stock price will go up (or down). That simple. 

Patience means telling yourself not to expect 1 million pesos tomorrow. Just develop a habit of investing any amount within your comfort zone. And do this every month. Easier said than done? IKR! (as in I Know Right?!). Then again, please take a look at our patience quote above one more time.

Budget
We're all in the marshmallow testing room everyday

Remember the marshmallow test? Where a kid will sit in front of a big, yummy marshmallow? Teacher leaves the student after the instruction: if he waits until the teacher comes back, he'll have 2 marshmallows. If he eats the marshmallow, then no more 2nd marshmallow. Studies show that kids who waited on the "teacher's comeback" succeeded in life compared to the ones who ate the marshmallow as soon as the teacher left. In so many words, we can sum it up into two: DELAYING GRATIFICATION.

Set apart a portion of your monthly income to fund your investment. Emphasis on the word: PORTION. We don't mean save everything, just a portion. 20% is safe some says. Make it a ritual to invest 20% of your income each payday. Either that or spend it all. Will you wait for your 2nd marshmallow? 

Pray.
"Without me, you can do nothing." -JESUS

With computer age like ours, vast information can always be available but wisdom somehow is getting scarce by the day. You may have all data coupled by mind boggling graphs, but without wisdom, it will all be futile. As Proverbs 3:6 advises, include God in every thing and he will crown your efforts with success. Out of all the 5 tips, this tip is the only tip I can guarantee :) This goes not only in stock investment but on all facets of life as well. -CMK

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3 comments

  1. These are very useful investment tips. I will recommend to my friends for reading this blog.

    Where to invest money

    ReplyDelete
  2. One more important thing which you should always remember while investing in dividends is never trade money that you cannot afford to lose. You should only trade the money you can afford and will remain financially comfortable and in the stock market for many years to come.

    ReplyDelete

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