Why you should invest in the stock market

Posted at 08/10/2014 1:55 PM | Updated as of 08/12/2014 11:20 AM

(Editor's note: This article was written by MoneyMax, the Philippines’ foremost online platform for comparing financial and telecom products and services, for ABS-CBNnews.com. Find out more at MoneyMax.ph.)

MANILA, Philippines - Investing in stocks is one of the most effective ways of making money work for you. Though it involves more time, it doesn’t require you anything but to invest and watch your money grow.

Stocks are shares of ownership in a corporation. Once you invest your money, you will be a shareholder and will get a portion of the company’s earnings or shares.

The stock market is a place where stocks are bought and sold. Here in the Philippines, the Philippine Stock Exchange (PSE) is the corporation that governs the Philippine stock market.

Here are general rules:

• Invest as early as possible. Take advantage of the price appreciation over a greater period of time.
• Invest regularly. For greater returns, regularly add a significant amount to your capital every month, or every year - just make it a habit.
• Invest long-term. Don’t withdraw your shares as soon as you see your profit – the longer-term, the better.
• Diversify your investments. “Do not put all the eggs in one basket” as they say. Allocate your capital to a number of companies in different industries so as not to put too much risk in one area.

How to start investing?

1. Choose a stockbroker. Call PSE or research for legitimate stockbrokers. Compare and choose the best that suits your needs and budget.

2. Open an account. Did you know that you don’t need millions of pesos to be a stock investor? You can start investing in stocks at the lowest amount of P5,000.

3. Be in constant communication with your agent. Aside from representing you in the stock market, a stockbroker can also offer you services such as access to market reports/studies, on-time delivery of important documents, and practical advice on your investments.

Here’s an infographic to let give you more information about stocks: