How To Invest In The Stock Market

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Many are afraid to invest in the stock market probably because they’ve heard countless stories about how someone has lost all their money in it. However, if you’re equipped with the right knowledge and proper mindset, you’ll discover that the stock market is actually one of the best places to make money.

You should determine how much of your time you can devote to studying and monitoring your investments. Remember that businesses experience lean and peak seasons and the money market fluctuates, if you are out of the loop when these things happen, chances are you won’t see your money back. Keep this in mind when you finally choose your investment.

I was reading the newspaper the other day, particularly the stock market section, when the 12-year-old son of a friend asked me what the table of numbers on the page was. I said that it’s the stock market prices of Philippine companies. He obviously got curious because he then asked me to explain what the stock market is and why it’s so important that newspapers publish that table everyday.

Investing is long-term, which means you buy, hold and sell after several years or even decades. Trading is short-term, which means you buy and then sell only after a few days, weeks or months. In forex, some traders buy and sell only after a few seconds, minutes or a few hours.

Most of the things I know about stock market investing, I learned by reading various resources online. The internet has a lot of them, but I know, from experience, they can be quite hard to understand specially if you’re a beginner. That’s why I’m now writing for you this straightforward, no nonsense explanation of how the stock market works and how you make or lose money from it. If you want higher level knowledge there are some resources here.

If you want to invest in the stock market but you don’t have the time to monitor and study the daily, weekly and monthly movements of stock prices; then I highly recommend doing cost averaging. What is Cost Averaging? Cost averaging is an investment strategy which requires systematically purchasing securities at predetermined intervals and set limits over a long period of time.


The stock market is one of the best places to invest your money for the long-term. When I say long-term, that means you should be willing to let your money “sleep” and grow for at least 5 years or more – the longer, the better. Also, if you cannot commit to study and time the stock market, then the best investing strategy is to do cost averaging, and these Philippine stocks should be your top buys, as recommended by my stock broker COL Financial.

When you hear the term “stock market”, the first image that comes to mind for most of us will be the chaos that we see in the movies and television – people shouting and talking on the phone, passing around countless pieces of paper, while the stock ticker marquees above all of them.

People who have been asking me how to invest in the stock market has more than tripled over the past couple of months compared to the same period last year. I couldn’t blame them, because news on the current bull market is everywhere – from social networks to traditional media.

This is the story of Earl Crawley, a 69-year-old Baltimore parking lot attendant. He’s been working there for around 44 years. He’s dyslexic and is earning only a little over the minimum wage for employees in Maryland, United States. And yet, he owns a fully-paid house and a net worth of $500,000 (that’s roughly Php 20 million at current rates).

A lot of stock market traders and investors were celebrating last April 2013 when the Philippine Stock Exchange Composite Index breached the 7,000 mark. But what exactly is the PSE Composite Index and why is it important to know its performance?

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Photo credit: mmmmay lee


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