Investing in stock market is no child’s play. Some people think that it is as easy as putting in the money and leaving it to grow. A lot of factors are involved in stock market investment like what the trend is currently in the market, the local economy, the global economy, and what is the company’s valuation.
Let us take stock market investment in the Philippines, for instance. There have been dramatic fluctuations mainly because of the local economy and the political climate in the country. However, there are predictions that after a volatile 2018, it will improve significantly in 2019, hitting 8,400 to 8,800 level by the end of the year.
Right now, you do not have to be a millionaire to invest in stocks. But there are important things to consider before you part with your money to stock investment.
Make sure you have money
People forget that there really is no need to use all your savings for investment. Remember that the money you put into it must be extra money, not an amount you should allot for something important like house payments, bills, or other daily expenses. First, ask yourself if the money you want to put in will have a dire effect in your life if you lose it. If the answer is yes, then maybe you need more time to save up.
Be financially literate
The most important aspect of investing that most people look over is the research and studying involved in it. When you invest, you must know all the key terms — basically, you must be able to speak the language. Get financial literacy lessons from investment companies who usually offer it before they let a client open an account.
For instance, you should know what a bull and bear market means. When they say the stock market is bull-ish, it means that there is an uptrend and the stocks are rising. On the other hand, when it is bear-ish, it means there is a decline in the market performance.
Know your investing goals
Why are you investing in the first place? Knowing this will help guide you when you are already choosing what kind of investment suits your needs. For those who would like only to preserve their money, maybe stock investment is not the right choice for you. But if you want to have a recurring income, you can start looking at stocks with sizeable payouts.
Check your level of risk
Note that different investments have different levels of risk. It would be best to consult with a broker to help you with deciding if you want to try it out first with a short-term, low-risk investment, or if you are ready for long-term, high-risk ones.
In general, the higher the risk is, the higher the returns. But do not let that influence your decision. As much as you would want to earn significantly from your investment, you need to know your own level of comfort by taking a risk profile test. Especially if this is your first time, take the questionnaire and let a financial adviser see if you are more of a moderate investor or an aggressive one.
Make sure to open an account in brokerage firms that are highly recommended either by the stock exchange or the people who have been investing for years. Once you are ready, start looking at stocks which can give you the best results.