My college life may be considered as average. I was in the phase of my life where I needed to earn a degree then enter the professional world. Like most 20-year-old Filipinos then, I did not have a sense of direction. It was a plain, dull routine until my world turned 180 degrees.
I discovered the stock market. And admittedly, I got hooked. Something inside of me whispered that this is where I’m going to shine. I took it from there and decided I wanted to carve a name for myself.
My infatuation turned into an obsession that I breathe, eat, drink, and sleep stock market. Interest in my studies waned to the point of nearly quitting. Stock trading became my thing and I look back without regrets.
I managed to complete my studies and landed my first job as research assistant in the country’s premier stock brokerage firm. I learned the ropes so to speak and honed up my stock trading skills.
5 Ways to prepare for investing in the stock market
Modesty aside, I have the competence now to impart my knowledge and trading skills in the stock market. I also desire to be a mentor to like-minded individuals. For starters, financial windfalls can be realized in the stock market. Success is not far behind if you follow these ways drawn from personal experience, perseverance, and passion.
1. Educate yourself
Investing or trading in the stock market is not a game. It’s a serious endeavor. If you want to take control of your finances and secure your financial well-being, prepare to sacrifice.
The initial step is to educate yourself. Learn about the general aspects of the Philippine stock market. Familiarize yourself with the stocks or equities listed on the Philippine Stock Exchange (PSE). Understand the sectors to which they belong and the corresponding symbols or tickers. Read the business news and be updated on what’s happening on the scene. You don’t stop there because every day is a learning opportunity.
The learning curve is steep but with dedication, you’ll get a good grasp of the market sooner than later.
2. Save up for your investible funds
Your money won’t grow exponentially if you park your cash in the traditional savings account. Since no one is prohibited from investing, the stock market is an excellent avenue to make your money grow. The only thing you need is to have the capital for investment.
Make sure that you separate your savings or emergency fund from your capital for investment. The moment you part ways with your investment, you can’t pull out the funds as easily.
There’s a holding period before you realize gains and conversely, losses. The stock market involves the buying and selling of stocks. In each of the two trading activities, timing is important.
Timing is another aspect you’ll learn as you gain experience.
3. Be mindful of the risks involved
Keep in mind that investing in stocks is a risk. It’s not 100% safe. Market volatility is ever present. That’s actually the challenge for me when I started. I found it stimulating. It gave me the motivation to develop my trading skills so I could overcome the challenge and win in every trade.
You can earn two ways in the stock market. The first is through the basic concept of trading which is buying a stock at a low price then selling at a high price. The second is through ‘dividends’ declared by the companies. It can be in the form of cash or stock dividends.
You’ll find out more which of the stocks are paying dividends as you get entrenched in the stock market.
4. Set a financial goal
If I did not have the passion in stock trading, I wouldn’t be here. But as things turned out, I found the vehicle that can improve my financial condition and build wealth. Based on my experience, the stock market gave me the opportunity to set financial goals. Whether it is for the short-term, long-term, or a lifestyle change.
Entering the stock market without specific objectives makes no good business sense. Therefore, it would be wise to set financial goals. Assess the return you want to achieve and the time frame within which you expect to achieve it. Only time will dictate the kind of investor you’ll be.
The important thing is that you have a financial goal in place which you can amend moving forward.
5. Open your trading account
In order to formalize your entry into the arena of the stock market, you need to open a trading account. You can pick the traditional broker or opt to open an online stock trading account in established and reputable stock market websites.
You might need the guidance of a stockbroker at first or you can jump right in and trade on your own. Keep your emotions in check because you should always be objective and make well-informed decisions. One pitfall of some traders is when they allow emotions to rule them. Instead of winning a trade, they end up losing.
There are also attendant fees to consider in the stock market. You have the broker’s fee, sales tax, PSE transaction fee, and the SCCP (Securities Clearing Corporation of the Philippines) fee. As a stock trader, you’re duty-bound to know all of these fees and how they are calculated.
It is imperative to be fully acquainted with the fees because it could materially impact on your returns.
Starting the right way
The reason I’ve decided to share my insights on the stock market is so that beginners or newbies could be inspired. I’ve gone a long way since being enticed by the stock market. I’ve gained a treasure chest of knowledge that I could generously share. It’s a pity that many in the Philippines are still apprehensive about the stock market. But I am ecstatic for the new breed of investors who have also found the path to prosperity.
As for me, it taught me a lot about financial management and taking control of my investments. No one becomes an overnight sensation in the stock market. It’s a slow burn until you reach that stage where you know it by heart. You are able to preserve your capital, temper the risks, and reap the rewards because you did it the right way from the very start.