Reasons For Investing In The Stock Market – Part 1
In my previous articles, I gave a comprehensive introduction on how to invest in the Philippine stock market, particularly talking about the basic principles that each prospective investors should understand. In this article we are going to discuss the advantages of investing in the stock market.
I have stated before that the stock market is just another vehicle of investment. A good question to ask yourself is why should you choose to invest in the stock market. What advantage would you get in investing in the stock market ?
The answer to such questions could be as follows. Note that the examples given refer to Philippine based companies and currency. Visit my blog if you want to view the entire article.
1.) The allure of great returns – Most financial expert would tell you that in a bull run the market really goes up. Average returns could be as low as 30 % and as high as 200 %+ per annum or even more. Profit is always expected when you invest in the long term. For example, In 1997, the Globe Telecom Inc. (GLO) stocks price per share was only P152.00. during that time you only spend P 1,520.00 to buy the minimum board lot which is 10 shares. Currently the price per share of Globe is P 1,620.00+. The value of those 10 shares that you previously bought is right now P 16,200, meaning in ten years time your money has grown ten times. This is translated to an average of 30 % return per annum. This is far better than putting your money in a time deposit account at less than 4 % per annum. It is interesting to note that the Philippine stock market is at its highest these days. For the next 2 to 3 years, they say the market will still be in a bull run. Make the best out of this situation.
2.) You become “part owner” of the company that you are investing in. – You might probably be thinking of franchising a Jollibee outlet. However doing so would cost you somewhere between 20 to 25 million pesos add to the fact that you have to put in time and effort to run the store. Why not buy stocks of Jollibee instead of franchising a Jollibee outlet in order to own your “own” Jollibee. You get to own 100 JFC shares (Jollibee Foods Corporations – JFC) for only P 5,000+. In so doing you “indirectly own” the more than 1414 stores in the Philippines and 175 in other countries including Red Ribon, Chowking, Deli-France, A popular fastfood chain – Yonghe King in China and popular teahouse chain from Taiwan called Chun Shui Tang including Jollibee’s pilot restaurant “Tio Pepe’s Karinderia.” Now that is so cool! The next time you eat at Jollibee you could proudly say to your friends and relatives that you like to eat there because you “own” part of it. You more be more prompt in paying your telephone bills if you own stocks of PLDT or Globe telecoms.
3.) You belong to a special group of people when you invest in the stock market –
When somebody will ask me to join a multi-level marketing scheme I always ask when the company started. The reason is that because if it started a long time ago, then my chances of recruiting other people will be slim because almost everybody I know has already been recruited.
Investing in the stock market may not be the same as engaging in mutli-level marketing as it does not matter whether the market is saturated or not. However it is always so much better to have the knowledge that we are among the first people to “mine” out the gold in the stock market.
Most of those who invest in the stock market are from the class A and B segments of the population. An Asian Development Bank study done in 2005 revealed that only 600,000, out of the of the country’s 87 million population, invest in the stock market. This means that only 0.7 % of the population are involved in stock market trading.
Would you like to know more about investment strategies ? Visit the blog of Zigfred Diaz where he blogs about several interesting topics such as investments, money management, business, making money online and Stock market investing
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