A Beginner's Guide To Investing In The Stock Market
Clearance sale here and there, designer bags everywhere, and a signature macchiato from your favorite café every damn day. With all these extra expenses, how do you think your cash flow is going lately? I don’t know what your answer is but let me tell you mine. It’s fine. But nowhere near becoming a millionaire. Thanks to my emergency trips to the nearest coffee shop, several flight fare sales that I impulsively book, and the burning need to always purchase something whenever I’m in a mall even though I know I won’t use it—I’m officially living from paycheck to paycheck. And guess what? I was totally okay with it as long as I get to live what my definition of best life is.
But some sense got into me recently when I found out about this thing called the “latté factor.” It’s an expense term I’ve learned from a finance management seminar I recently attended (where I learned a lot from and now I’m sharing them with you). As explained by an analyst, the latté factor refers to the small purchases that we don’t consider, the things that we wind up wasting our money on without realizing it, including those fancy coffees that we buy.
Then it hit me. One grande cup of coffee or tea costs from P160 to P250. If we purchase one everyday, that means we spend around P4,000 a month just for a single cup of caffeine. A relatively small amount perhaps, but when it accumulates, that’s when we realize how big is the expense. Instead of continuing to drink pricey coffee, why not put my money where it can grow?
For anyone whose age is nearing the end of the calendar like me, finance talks are slowly becoming part of our daily conversations. This is also the perfect time to take inspiration from the older ones who have doubled or tripled their millions already. That is why when I learned that the household helpers of missionary Bo Sanchez became millionaires just by investing in the stock market, I got curious. If a minimum wage earner can do it, why can’t we?
Edward K. Lee, Chairman of COL Financial Group, advises, “There are 3 basic laws of money: the first one is to save at least 10 to 20% of your income; second, invest; and the third one is to reinvest through the power of compounding.” Compounding means you let your money grow on its own through interest.
So if you’re really up to the challenge of finding a way to earn more than just your basic salary, here are a few tips and tricks that I learned from experts on how to handle your money in the stock market like a boss:
Photo by Sharon Mccutcheon from Unsplash
TIP #1: It’s not as easy as selling something on the Internet. You have to understand every turn of the tide.
The stock market is a risky business. Sanchez’s helpers, who I now fondly call my #MillionaireInspo, didn’t earn theirs overnight. It required a lot of patience and understanding of how the market really works. The process may sound simple: save a certain amount of money from your salary, find a broker, and then just put your money where you think it’ll grow. But in reality, there are added factors to consider like knowing the right time to buy and sell stocks, and the right companies to invest in.
TIP #2: Patience is really a virtue.
You see, the stock market is not always a straight upward line. It goes up sure, but it also comes crashing down. The tricky part comes in when you think that you’re already earning from it and you’re tempted to withdraw your money already. The pull is almost always strong, which is the reason why a good percentage of investors pull out their money when they see that it’s growing. “Let me tell you honestly—the most likely to succeed in the stock market is the passive long-term investor. Not the short-term traders who buy and sell their stocks in a matter of weeks or months,” says Lee of COL Financial Group. Your money will grow, no doubt about that, but the honest timeline would mean you should wait seven to ten years before it blooms a hundredfold.
TIP #3: Study the trend of the stock market.
Quintin Pastrana, an accomplished entrepreneur and host of ANC’s On the Money,weighed in on the matter as well. “If you really plan to invest your money in the stock market, either you hire a financial expert to look after your investments or learn by yourself,” he explains. His suggestion, however, is that the latter may be the wiser option. Aside from your getting the hang of the buy/sell approach, you will also get a front row seat on the market performance thus allowing you to study how to handle your money better.
TIP #4: Time is of the essence.
If the fruitful return of your money will happen seven to ten years after, wouldn’t it be best if you invest now? Remember, if you’ve clicked on this article knowing what the topic is about, that means you’re either a young professional or an experienced career person who wants to do something with their money, which translates to: You’re. Not. Getting. Any. Younger. This goes as well for the older generation who still want to double their savings. The earlier you do it, the earlier you get your reward.
TIP #5: Find your purpose (for growing money).
I’m sure you all have reasons why you want to become millionaires. Serving the poor, helping organizations, travelling the world someday. Whatever reason you may have, you need to have the right mindset. It’s all about expanding your psychological wallet, believing that you can achieve what your target amount is, and that you’re willing to wait for it to grow. Admit it. Not to sound greedy or anything, but we need money. And needing money is not bad at all as long as you know it’s not for unlawful use.
There may be other investment choices on where to put your money (save that discussion for later), but the stock market, as they say, may be the easiest and the most secure way to become a millionaire—as long as you follow certain rules of thumb. So buckle up, future wolves of Wall Street! Your stock market investment journey is a long, bumpy road, but take it from the experts, it will be worth it.
Thumbnail and cover photos from Pexels