For newbies who are trying to figure out how the stock market works, this blog is for you! I know there are lots of information on the internet right now. I know you’re overwhelmed with too many details. I am here to simplify things for you. Let’s not complicate things. Let me show you how the stock market works.
Many new investors are showing interest in the stock market right now. Even college students are interested to put their small savings in stocks. I’m glad that more and more Filipinos are opening their doors for stocks. There is indeed a great opportunity here if you know what you are doing.
Your shares in the company
The first thing you have to learn when you invest in stocks is that the stocks you actually bought become your shares in the company. For instance, you invested 10,000 pesos in Jollibee (JFC), which is equivalent to, let’s say 1,000 shares. In this case, you became a shareholder of JFC with 1,000 shares. By investing in stocks, you are actually buying a portion of the company. So, instead of using your 10,000 pesos to buy C1 and other Jollibee products, it’s more worth it to buy the company’s stocks instead.
Catch me in my live training events! (quick plug)
The heart of why I do these seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more about how you could time the market check out the training below.
Price increase and decrease
A lot of new investors are confused about this part. How does the price of a stock increase or decrease? The price of a stock increases when more investors are buying it. For example, if the price of JFC when you invested is 100 pesos, the stock price will go up if more people will buy the stocks. An increase in price means you are going to profit from your investment. The price of a stock decreases when more investors are selling. This means that they are getting rid of their investments. So, if you buy JFC at 100 pesos and suddenly investors sell their stocks, you will have unrealized profits. The value of your investment will go down as well.
Remember, when more people are buying, the stock price increases. When more people are selling, the stock price decreases.
Some companies pay dividends
You will receive dividends from companies if you invest in dividend stocks. This is actually additional income for you. Aside from the fact that you profit from the price increase, you will also gain when the company you invested in generates high income for the year. There are a couple of good dividend stocks in PSE. Make sure to research first about the company before you put your money in it.
Long-term investment
The stock market won’t promise you wealth overnight. You need patience and discipline when you invest in the stock market. You won’t make good profits if you always monitor your stocks. You won’t make money if you buy high and sell low. As early as now, you must understand that the greatest thing you need when you invest in the stock market is patience. This is a long-term investment, not some sort of overnight magic that will make you rich quickly.
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