Monday, 11 May 2015

MONEY MATTERS : 3 THINGS TO CONSIDER ABOUT BLUE CHIP STOCK INVESTING

I’m literally up in the air as I type this post. For regulars on CMK blog, you’ll have a hint where I’m bound. My plane is flying from Manila, PH to London, UK. Wee. Goodbyes are bittersweet whichever angle you look at it. I’ll miss Manila but I’m excited for London too. And vice versa! Well, life is like that, a series of ‘hellos’ and ‘goodbyes’ but as long as you have your center (to me, it’s a personal relationship with Jesus Christ) – you’ll do fine. I was about to type then delete this part: “apologies if you find me dropping Jesus– or other ‘spiritual or to some, corny topics, every once so often… “
 
But then, the abundance of the heart the mouth speaks, isn’t it? I love Jesus and I’m not ashamed of that. And I think we should stand up for whatever convictions we have. Never imposing but brave enough to share, at least.
 


Whew! Right, that’s an entirely different introduction people! Because what I’ll be sharing with you today has something to do with stock market {as the title gives away}.

I’ve been investing in stock market for a couple of years now and one of the things I’ve learned is: LEARNING IS AN ONGOING PROCESS, as with any other things. I think there’s a bit of attachment with financial investing because, after all, that’s our hard-earned money on the line.

Blue-chip companies. If you’re kind enough to visit the MONEY MATTERS section above, you’ll have an idea what this cool term is all about. Simply put, these are companies that a) have been operational for a long time and b) pricier than non-blue chip ones. Here are 3 things to consider when investing in blue-chip stocks.

ROOM FOR GROWTH 

I’ve known someone who made millions of gain just by investing consistently for the past 10 years. Which stock is this? It’s DMCI Holdings, Inc. Yes, I just spilled the beans, but it’s not me, for the record. I wish it was me indeed but nope.

If you’re thinking what I’m thinking, you’ll probably say – Okay, I’ll yank in my funds at DMCI! Hold your horses! This is where room for growth comes. We need to check if there’s enough growth space when investing. This is not to say, DMCI has no promising growth but it’s best to at least be aware where the company is heading.

Way back in the 90’s, Jollibee (JFC) shares were only less than Php 10*. Then came 2013, it went up to Php 170*. Then just recently (2015), it’s share price is Php 200*. If you’ve invested 10,000 shares at Php 10, then you’re looking at Php 1.9M gain. But that is if you’ve invested once and never again. What if you’ve consistently invested a portion of your funds over time? Which leads to my next point.

TIME HORIZON 

Fact: stock appreciation takes time. You know why so many people are getting scammed? It’s because they want to double their money at the SHORTEST time possible. That’s super risky and chances are it’s illegal. Again, if it’s too good to be true…  it’s not true.

It took that man 10 years, and several bull and bear market cycles, before he got millions of gains. I’ve heard someone said that stock market is more of psychology rather than mathematics. Sounds about right. When you invest, especially if you’re not a master trader (if there’s such a thing) prepare to wait it out. As my boss usually says, the things worth having takes time!


SHARE PRICE
You don’t want to buy an overpriced gadget don’t you? The same is true with shares of stocks. A more relevant question is – how would you know if a stock is overpriced? There’s no direct answer to this so we need to do our homework and look for ways to find this out. I’m aware that most of us are not full time investors, and I know too that the last thing you want to do after work is to look at annual reports with numbers goblesdegoops! Exactly! With numbers we can’t understand! Ergo, if my time permits I’ll write a separate post on how to work around the idea of investing with the least amount of effort required (and this is from my personal experience).

Mean time, how would you know if stock market investing is for you? Find out HERE. -CMK

*Numbers are approximates
**Picture is from Pinterest
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