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Investments may include insurance policies, pooled funds, savings accounts, and the stock market. The stock market remains to be the highest profit-generating option for Filipinos.
Trading and investing in the stock market not only requires your money but also your time. You need to study the reasons why you should invest or why you are invested in a stock. There is no shortcut to a profitable trading and investing experience. Here are five evergreen tips for beginners and for those who are planning to invest in the Philippine stock market. These tips do not require the brain of a rocket scientist, but these have to be told to remind us of the fundamental principles to a successful stock trading and investing experience.
Determine Your Investment Goals
What will you do with the money in the future? Astro del Castillo, First Grade Finance Inc. Managing Director, stated that before investing, you have to determine your goal. Your aim may be to buy a car, purchase a house, get extra income, or to save for retirement.
Marvin Germo, a financial consultant and stock market trader, stated that if you are opting for a long-term goal (e.g. over a decade), the stock market is the best choice.
Learn the Basics of the Stock Market
Stock market basics include what trading is all about. Relatively, the stock market is a pool of companies trading their shares even to the public. By buying a portion of the company’s share, you have the opportunity to partner with big companies. Publicly-listed companies sell company shares to raise capital instead of applying for loans.
Find Out Your Risk Profile
You have to determine if you are a risk-taker or a conservative investor. You can determine this by participating in seminars or training for stock trading. By doing so, you can be guided on what type of stocks you are going to invest in based on your risk profile. There are stocks that are too risky for a beginner.
Do not mix your cash allocation for long-term investing and short-term trading. Jaycee De Guzman, Stock Signals’ founder, advises to trade only with your free cash on your free time. According to him, your first priority should be your capital allocation for your long-term portfolio. He highly recommends proper slicing of capital in accordance to your risk tolerance. For example, if you’re a beginner in short-term trading, he advises to trade with a small amount at first and increase it as your confidence level and skills grow.
Give Time for Investment
Del Castillo advises that in order for you to have a good strategy, you have to avoid being emotional or greedy. Germo, on the other hand, stated that an investor must set his or her risk profile. Check your investment not only when the market’s trend is up.
These five tips should already go without saying. However, we need to tackle them for we are tend to miss the basic.