4 Reasons Why You Should NOT (yet) Invest In The Stock Market

Updated: February 20, 2024

People constantly ask me if it’s a good time to invest in the stock market. Regardless of whether it’s a bull or a bear market, there are always questions on how to start investing.

It is expected because when it comes to investing, the stock market is really the first thing to come into mind for most people, thanks to the movies, in my opinion.

Also, whenever there’s news that the Philippine stock market has reached another record high, people who don’t own stocks feel that they’re missing out on the “greatest party of the year.”

When that happens, many get the courage to open an account even if they have zero knowledge of what they are actually getting into. They’re only armed with hopes that they will make money from the stock market.

So, to those who are planning to invest in the stock market, I’d like to give one piece of advice:

Only invest money that you can afford NOT to touch for at least five years; the longer, the better.

Now, for those who are still thinking of investing in the stock market, here are four very important reasons why you should NOT do it unless you want to lose money.

Reason #1: You don’t have an emergency fund.

Before investing, get into the habit of saving first.

More importantly, be sure that you have at least six months’ worth of your monthly expenses safely tucked in a savings account or a 30-day time deposit.

Read Now: Emergency Fund Calculator: How Much Money Do You Really Need?

Reason #2: You don’t have low and moderate-risk investments yet.

The stock market is a high-risk instrument. All smart investors will tell you that the best way to manage your risk is to have a balanced and diversified portfolio.

This means having the right proportion of low, moderate, and high-risk investments.

If it’s your first time investing in paper assets, then please go for low and moderate-risk investments first.

Read Now: Where and How Much Should You Invest? Tips on Creating Your Portfolio

Reason #3: You don’t have an investment objective.

Why do you want to invest in the stock market? Don’t tell me because you want to make money. Have a more concrete reason than that, or to put it another way, ask yourself – where are you planning to spend the money afterward?

Having a specific investment goal will help you determine if the stock market is the best option for you.

Read Now: A Beginner’s Guide To Investing In Anything and Everything

Reason #4: You don’t understand how the stock market works.

How do you know if you’re ready to invest in the stock market?

At the very least, you should be able to define and make a 12-year-old kid understand the following stock market terms:

  • Stockbroker
  • Board lot
  • Fundamental analysis
  • Technical analysis
  • Price-to-earnings ratio
  • Support and resistance levels
  • Bull and bear markets
  • Cost averaging strategy

Read Now: Explaining The Stock Market To A 12-Year-Old Part 1

It’s okay to miss the party.

If any of the four reasons above applies to you, then I advise you to just “stay home and miss the party”. I guarantee there will be another one waiting for you once you’re ready.

Lastly, should you want to learn more on how to invest in the stock market the right way, then please read through my collection of posts that’s guaranteed to help you understand how everything works: How To Invest In The Stock Market

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  1. Awesome advice, Fitz! =)

    At the very least, folks who want to start investing in the stock market should first invest time in learning not only about the stock market, but over-all, in learning about personal finance.

    What’s so great about our time today is that information is readily available to us because of the internet. Personally, one my resources for such subject as Personal Finance is Ready to be Rich!

    Thank you for sharing your stories, knowledge, experience, and learning, Fitz! May you continue to be a guiding light to those embarking on their own journey towards financial freedom! =)

  2. Depende po kc sa tao, kailangan nyo mag-aral bago kayo pumasok dito…I’m a stock holder walang alam sa stocks dati, sinugal ko ang 5k ko, ehh naadik ako sa market kaya nagaral ako ng husto ngayon po ung 5k ko mahigit sa triple na po ngayon coz of the stock market. Lahat ng bagay napagaaralan, ang internet ay parang isang malaking quiapo lahat ng gusto mo makukuha mo…kaya mag-aral ka, mag research ka kung ayaw mong magpahuli sa mga kumikita na…

  3. Sir Fitz,

    I have a feeling that those people are entering the market on the bandwagon basis and if the stocks goes down, they’ll soon panicked then pull out their funds without thinking.

  4. For those who are “stoned” with all 4, here are my tips:

    – Get insurance to cover Reasons 1&2.
    – Only YOU can help yourself for reason #3.
    – Don’t worry about #4! There are a lot of free stuff for you to learn. And people are willing to help you out!

    Sir Fitz,
    If I may add:

    Reason #5: You’re drowned in debt! Settle your debt first before venturing in any form of investment.

  5. Actually gusto ko dati maginvest sa stock market, pero dahil limited ang knowledge ko tungkol dun mas prefer ko nalang ang mutual funds.

  6. Stock market is all about luck, too. And in this day and age you can’t really afford to lose money.

  7. Very insightful, Sir Fitz. Just like you, I have gotten some inquiries from my friends about how to invest in stock market. I am thrilled that they are also interested but I am a little concerned because they are jumping into a bandwagon without really knowing what they are getting into. I am going to give them a some sort of informal lecture this weekend and I hope I can help them decide whether investing in the stock market is appropriate for them or not. Good luck to me.

  8. if you know the risks and are willing to take it, dont let this article spare you the benefits that can be reaped if investing in the stock market is done correctly.

    this article should instead inspire anyone to learn more about how and the proper way to invest, when to enter or exit from a stock, know the variables and patterns, do research on a company before buying, etc. etc.

    one does not get rich quick without the proper experience. I have seen and met people who wildly invested and profited big, but because they lack experience, they also lost a lot.

    so, study, learn, practice. there are simulators that can help you learn without losing money. google them and you are one step into a profitable investing experience.

  9. Only enter if you have KNOWLEDGE. some investor will pull if the stocks goes down but those who knows better will take advantage of it. Buy Low Sell High = $$$$$

  10. EH karamihan kasi sa mga tao na kung bakit ayaw nilang mag-invest sa stock market ay dahil ay sinasabi nila na malulugi raw sila at ang iba naman ay nagsasabing sugal raw at scam kaya iyan ang dahilan kung bakit hindi nag-iinvest ang tao sa stock market at kasama na rin dito ang lack of financial litercy program dito sa ating bansa.

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