So, sometimes it amazes me why certain demographics (don't get me wrong they are still a very few) outside my family bothers to read my musings at all. Okay, so now to my point. You may not want to read this little blog BUT I urge you not to let this one pass.
My husband is my guest blogger. And he will talk about something that might change your outlook when it comes to your finances. No strings attached just pure unadulterated sharing for the sake of passing on something good. Read up. ;)
Note to hubby: I hope you can do more of this to add more sense in this blog. Haha. As always I am prouder of you than anyone else in this earth could ever be.
How you can start investing in the stock market
- Compound interest
- Consistent, regular setting aside of a portion of your income for stock market investing
- Knowing the difference between stock market trading and stock market investing
Did you know that that P50 can become P50 million and make you insanely wealthy because of compound interest? Consider the following tables:
The investors in the tables above ONLY made a one-time investment of P50 and let compound interest do its work. But are you only capable of such a similar move?
I’m sure you can do better than putting in a P50-savings once in your lifetime right? You can instead put in P50 every year, yes?
Let’s say you decided to put in P2,000 every month which makes P24,000 per year. Using the rate in table (iii), see computation below how that very doable effort can bring you faster to a wealthy status:
Stock Trading or Active Trading
In stock market trading, the buying and selling activities happen in a span of a month, weeks, days, or even hours. Trading within these short time spans often necessitates a lot (really a lot!) of effort and makes use of very complex statistical analysis and forecasting tools.
I think this kind of media portrayal is what scares most people from being involved in the stock market.
Stock Market Investing or Passive Investing
In stock market investing, the buying and selling happen in a span of several months, a year, or several years. Short-term fluctuations do not matter and so one does not need to put in a lot of effort in predicting when to purchase or sell a stock.
|Figure 2: Stock Market Investing|
Understanding and appreciating the three items I have described above is I think already 90% of the strategy that you need to apply in stock market investing. My goal in this write-up is to convince you that you can do stock market investing. I hope I was able to do that. This is the basic level – knowing that you can do it.