When I tell people I invest in stocks, I usually get one: a wide-eyed stare or two: a head to foot. At 27 years old, I have been a stock market investor for almost three years. Today, I would like to share how I did it and why I am actually doing it.
You see, stocks investing is not a very popular concept in the Philippines. Blame that on the fact that it is not taught in school and Filipinos have this universal fear of the stock market. Ask anyone you know and they can swear that they have an uncle, a neighbor, a ‘kumpare’, or a long-lost relative who went bankrupt because of it.
In the years that I have been investing in stocks, I have but one advice that I believe everyone should religiously follow: Aral Muna Bago Invest (Study First Before Investing). You would know where I got this in the following paragraphs.
Before I start with my story, I’d like to assure you that there wouldn’t be any complex Mathematical equation in the succeeding sentences. That is another stocks investing misconception: too much Math. The truth is, I’m one person who is terrible in Math and it didn’t stop me. Okay, let’s get started.
My Maid Invests In The Stock Market
One lazy afternoon, I got bored and decided to wander around our house. In the shoe storage area, I saw my mom’s stack of pocketbooks (Precious Hearts Romances) and I noticed one book that looked out of place: the title was “My Maid Invests In The Stock Market” by Bo Sanchez.
I had no idea what the book is about and didn’t even know who Bo Sanchez is. But before I knew it, I finished reading the book in 15 minutes and it changed my life forever.
I learned that Bo Sanchez is an entrepreneur and preacher. In the book, he had three maids and a driver which he introduced money management and investing to. I learned the value of budgeting through that book. Bo introduced the envelope technique to his helpers where they segregate their money into different envelopes with labels like tithe, retirement, emergency fund, ‘padala’, personal expenses, etc.
The technique was very effective for me. I even used real envelopes at first to budget my money. I had many envelopes: tithe, bills, retirement, emergency fund, travel fund, Lasik fund, etc.
Out of these envelopes, the retirement fund is the one used to invest in stocks. It is a common misconception that stocks investing is only for the rich, but if Bo’s maids can do it, then why can’t everyone do it? Budgeting plays a big role here coupled with a great amount of discipline.
One part of the book that made an impact on me was when Bo narrated that he brought his helpers to an institution for poor and abandoned former house helps. Here, his helpers got to see the fate that many people lead when they reach the age that they couldn’t work anymore.
I realized that it is indeed crucial to prepare for retirement. I may have my own children in the future but they shouldn’t be my retirement fund. By the time I am old, they would have their own lives and it’s not their responsibility to finance my needs. When I get old, I would need maintenance medications, access to quality healthcare, and money for my everyday needs. Because you know, it’s impossible to work forever. The key then, to an independent and comfortable retirement, is to start preparing early.
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Pesos And Sense
So I created a budget. I cut down on unnecessary expenses and tried to live as frugal as possible to enable me to stick to that budget. However, stocks investing continues to be a blurry concept for me. I then came across Pesos and Sense, a defunct TV show that teaches Filipinos about financial literacy.
Hosted by Aya Laraya, it was an extremely informative and easy to understand show. I went to YouTube and watched all 13 episodes in two sittings.
I learned that the stock market is a marketplace wherein instead of seeing meat, vegetables, and rice on sale, company shares or stocks are being traded. Not all companies are in the stock market, only those who need a huge number of investors are publicly listing their shares.
These companies have various reasons for publicly listing their shares and one of their reasons is expansion. Instead of approaching big entrepreneurs like Manny Pangilinan or George Ty, they enter the stock market to sell their shares to small investors: normal average-earning people like you and me.
The first stock I bought was Jollibee (JFC) then at Php 185 per stock. Because of this purchase, I became part-owner of the company so whatever happens to JFC, will have an impact on the money that I have invested. As of writing, JFC is valued at Php 214 per stock. This increase in value is called capital appreciation, one of the ways to make money in the stock market. With the awesome marketing strategy and good reputation Jollibee has, who knows how much its value will be in the future, right?
In the episodes of Pesos And Sense, I like how Aya Laraya always tell the viewers to study first before investing. His exact words were: ‘Aral muna bago invest’. It is such a powerful advice that I hold dear.
Both resources recommend online stock broker COL Financial. Since I am practically clueless of other existing stock brokerage companies, I just opened an account through the company. I filled out some forms, funded my account with PHP 5,000 which I used to buy my first stocks (ALI, as what I have mentioned earlier).
Everything is done online: from the funding, stocks buying and selling, and even receiving dividends. Another thing that I like about COL Financial is that they conduct seminars for their investors. I went to most of these seminars: some too technical for me, but at least they gave me a clearer picture of what I am putting myself into.
To further educate myself, I bombarded my social media accounts with everything about stocks investing and money management. I joined Facebook groups for investors, followed Instagram accounts of people who have the same advocacy, and more. This way, whenever they share some valuable insights about the topic, I am able to acquire them without even making any huge effort. I also get notified of seminars on financial literacy because of social media.
How Do I Know If My Money Is Safe in the Stock Market?
Honestly, my money is not entirely safe.
It is very important to understand that if you enter the stock market as an investor, your money is not insured. If you are not okay with this, then know that there are other means to still enter the market through other investment vehicles like VUL or UITF.
The stock market is highly volatile so you really have to study and determine your risk tolerance before you make a grand entrance.
In my case, I am a long-term investor. I only buy big companies which I believe is still standing until my retirement age. To determine which, I do quick research on their reputation and growth. I do not monitor the prices like veteran short term investors do. Mainly because I don’t have the time and I have no idea how to do it. Also, short term investing AKA speculating on the market trends is very dangerous. This strategy has caused a lot of people to lose huge amounts of money and I wouldn’t want to be part of that lot.
I am one chill investor with a specific investment day of the month (payday). I look into my stocks in that day and determine what else to buy and hold for the next couple of years. Again, this is me: everyone’s risk tolerance is different and so the strategies vary. In the future, I plan on tweaking this strategy to make it more profitable. For me to do this, I need to study more.
It all boils down to my favorite investment advice: “Aral Muna Bago Invest” (Study First Before Investing). Only through knowledge can we minimize the risks that come with this very unfamiliar concept. If you are with me in building a wealthy future for yourself and your family, then spending a few hours a day learning how to manage your money well is a small price to pay. I hope you learn a thing or two in this post. Again, I am not an expert investor, but I welcome any questions which I’ll answer if I know the answer, and if I don’t, I’ll direct you to the right people.