If you’ve been hearing about the stock market for a while but still haven’t embraced the idea of taking a ride on it, or have been investing in stocks for a while but is now starting to lose faith in it, this is maybe because of the lies about the stock market that you’ve had read and heard and been doing.
It is important that before you continue believing on these lies, you should keep a balance view of the stock market.
Here are those lies that have been roaming around.
1. Investing in Stocks Is a gamble
I remember when I mentioned the stock market to my brother. His first reaction was, “singa sugal itan” (that’s just like gambling). Because of this notion, many people stay away from it.
Why is investing in stocks different from gambling?
Buying a share of stock gives you a right to claim on assets or a part of the company’s profits that it will be making. This is because your shares represents your ownership in a company.
Also, the value of a company is assessed every now and then. These constant assessments make the stock price go up and down. However, over the long run, a company if well managed is expected to accumulate value which can bring good returns to investors.
2. The Stock Market Is Only for the Wealthy
Just few days ago, one of our subscribers was asking, “I am interested to invest pero baka malaking pera ang kailangan dyan.”
When I first heard of the stock market, I also had the same question. When I first introduced the stock market to my friends, they too asked the same question.
The lie or misconception about needing a huge amount of money to start hinders many to begin investing in stocks.
How Much Money Do You Need To Start?
Many online stock brokers now in the Philippines allow investors to open an account with a minimum investment of 1000 Pesos.
Then, you can add any amount that you want on any banking day you prefer. And nope, there’s no maintaining balance.
Although it is advisable to invest small amounts regularly, there will be no penalty if you won’t be able to fund your account and buy stocks regularly. And nope, your account won’t be closed.
3. Stock Price of companies that have fallen will eventually go Back up
As companies are constantly assessed, prices of some companies’ shares go down because of several reasons. And buying shares of companies that have fallen by just believing they will go up again is a devastating idea.
But I thought I should buy more if the price is low so I can maximize my earnings?
Although that is partly correct, price is just one part in deciding whether or not to invest in that company.
The value of the company should also be considered. Is the company of high-quality but at the moment undervalued?
The bottom line is to buy companies at a reasonable price.
4. It Will Create Quick Money
Since I started introducing stock market investing, I often receive questions like, “Gaano kabilis ang ROI dyan?”, or “Will my money give me a passive income everyday?”
If you have millions of shares of a particular company, you can quickly earn much money just by a tiny rise in the price per share.
But anyone who’s new to stock market investing and is starting small and investing regularly, this is not going to happen. An ordinary teacher or employee has to be disciplined enough to gradually accumulate wealth over a period of time.
You also need to learn to take advantage of the constant rise and fall of prices of shares and the value of quality companies.
5. A little Knowledge about the stock market is Enough
Although it is a fact that you don’t need to know everything or have extensive experience when investing in stocks, it does not mean that a little knowledge about it is enough to help you survive in the market.
It is important that investors clearly understand what to do with their money and how the stock market works.
Investors who know what they are doing are the ones who succeed.
If you don’t have time to do your homework to learn how your money work, having a mentor is highly recommended.
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6. Stock Market Recommendations Are 100% Reliable
When the PAGASA announces weather forecasts, there are several instances that the weather on that particular day are quite different from what has been predicted.
Like weather forecasts, market forecasts are not 100% reliable. The stock market is affected by several factors. A single event in the country or the world can trigger the movement of stock prices on a particular industry.
Because of this volatility, investors are advised to scatter their eggs in different companies of different industries.
At the end of the day…
Stock market investing can be a successful vehicle towards wealth but it takes hard work, discipline and effort.
This is not a quick money making scheme nor a gamble.
You start small and add slowly.
Keep learning or you may seek a reliable mentor to guide you on your investing journey.