Finance

Basic Investment Principles In The Stock Market – Part 1

People have been asking me lately if they should invest in the Philippine stock market or not. Majority of them also wanted to know how they should start. I am not sure if they are really serious about it. They could just be curious considering that it is all over the news that the stock market’s performance is very positive.

The fainthearted has no business investing in the Philippine stock market or the stock market in general. A true investor always has expectations as to how much he will earn from a certain investment. Normally this is measured in terms of how much money will grow at a given time. (This is commonly known as interest per annum) Now that the Philippine Stock market is in its highest level for some time now, people think that they should get themselves involved. Sad to say most do not even have a grasp of the basic principles involved neither do they understand how the system works. This is not to imply that you have to be an economist before you should consider investing.

What I am saying is that you should understand the basic principles involved first before you could succeed in the stock market. While it is true that fortunes are made on the Stock market, loss of wealth has also been experienced by some. Some who just barge into the stock market without understanding the basic principles of investment end up leaving the stock market convinced that the stock market is no good at all as an alternative vehicle of investment.

Before discussing the details on how to invest in the Philippine stock market we must first have a good grasp on the basic principles of investment in order that we might possibly succeed and enjoy trading. There will be ten principles that will discussed. The first one will be discussed here. Other points will be discussed in the articles to come. Please visit my blog if you wish to see the article in its entirety.

1.) An alternative vehicle of investment – The first principle is that you must realize that the stock market is just another alternative vehicle of investment. There are other investment vehicles in which you could invest in. Each vehicle of investment is unique and one is not more superior than others. Each of them has their own advantages and disadvantages. This will not be discussed in depth here.

You must understand that the stock market belongs to an investment category called “Capital Markets.” Capital Markets are divided further into several categories. Here alone, there are several investment vehicles wherein you could place your money. Examples of these investment vehicles aside from the stock market are real estate, pension funds, bonds, insurance, different types of savings and time deposit accounts. It is of vital importance that you know this fact because knowing the different types of investment vehicles under the Capital markets will help you evaluate whether or not you should invest in the Stock Market considering that there are other vehicles of investment.

Bear in mind that each vehicle of investment has their own advantages and drawbacks. The secret here is not to place all of your eggs in one basket. Even if most of my investments are in the Capital Markets, I diversified by placing investments in the stock market, bonds through mutual funds, pension, deposits and insurances.

Desiring to know more about investment strategies ? Visit the blog of Zigfred Diaz where he writes about several interesting topics such as investments, money management, business, making money online and Stock market investing

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