A Beginner’s Guide to Investing in 2016

MANILA, Philippines - Tired of relying solely on your paycheck (or your relatives) for your day-to-day needs? The moment you enter the workforce, your new priority should be achieving financial independence. And unless you’re 100% happy with your current industry and earning potential, living from paycheck to paycheck for years on end can lose its appeal.

save money through investment

If you’re really serious about growing your money, you might be thinking of dabbling in investments. The Philippine Stock Exchange has been operating since the early 20th century, after all, and dozens of traders have already made a mint there. If they can do it, why can’t you?

Before you withdraw your life savings and head down to the trading floor, though, there are a few basic tips you need to take to heart first. Here is our newbie-friendly guide to investing this 2016:

1. Ask yourself if you’re ready.

Investing can be a great way to bolster your net worth, but the truth remains that’s it’s not for everybody. First off, you need to have all of your basic finances in order before you consider dipping your toes in the stock market. That means having a stable source of income, little to no debt, an emergency fund, and enough cashflow to support your basic needs without compromising assets like your mortgage, healthcare, or car insurance policy.

Even if you’re in a good place money-wise, look into other viable alternatives like mutual funds or securities first before diving into investments.

2. Learn the basics.

Think you’re ready to take that leap? The next step in your financial education is learning the essentials of good investing. Familiarize yourself with investor terminology and keep up with business news. Do your research on current business trends and investor behaviors. Take your time and don’t act like a know-it-all; ideally, you should have just enough working knowledge of the market to be able to tell the safe investment decisions from the risky ones. It might also be a good idea to consult an investment expert.

A Beginner’s Guide to Investing in 2015

3. Set a doable goal.

Since you’re still starting out, it’s best you don’t aim too high as far as your future investments are concerned. We’re not saying it’s wrong to dream of becoming the next Henry Sy or Jaime Zobel de Ayala, but aiming for a more realistic goal (like earning enough for your retirement or your children’s future) means you have less heartache to deal with should one of your investments go bad.

4. Start small.

This is the stage where you start building your investment portfolio, a.k.a. the key to your future wealth. You could start by investing a fraction of your income in an established company or a “safe” market like commodities or forex trading. Once you’ve gained more confidence in your investing abilities, inch your way into investing more money or adding another company (or two) to your portfolio. Remember that you’ll be juggling a lot of risk at this point, and that you’re not investing for the sake of making a quick buck.

5. Diversify your portfolio.

While maintaining your various stocks, remember that one of your main driving forces is protecting yourself from the effects of inflation. What may look like a large sum of money now may have less purchasing power years or decades down the line. Try your hand at investing in stocks from several different industries as backup in case of drastic changes in the economy. Or, to put it in more popular terms, don’t put all your eggs in one basket.

An important bit of information many financial experts recommend is to never invest in something you don’t understand. You may get tons of investing advice from friends, family, and other self-professed experts on how best to maximize your gains. Even if you trust their judgment, you must never jump at an opportunity without knowing exactly what you’re signing up for.

Investing is ultimately a game of risk, and there is no one-size-fits-all solution that would make everybody a stock market superstar. What worked for the richest trader on the Fortune 500 may not work for you, so you should resist the temptation to slack off or take shortcuts. It’s your money at stake, after all.

For more updates on what’s going on in the Philippines and other related topics, check out The Summit Express right now.


Kyle Kam is an online marketing specialist for Moneymax.ph, the Philippines’ leading financial comparison website. Whenever he’s not working, he’s busy at home watching MMA videos the whole day. You may follow him on Twitter @undisputedkyle.

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