Unless you already have millions to invest in the Philippine Stock Market or you’ve been investing for quite a long time, you can make more millions or your first million in the next few months.
However, if you’ve just had your account since last week with PHP 25, 000.00, then you surely sound too ambitious making your first million. Worse, you might even lose that hard-earned money if you fail to employ an effective investment strategy.
As Warren Buffet warns, “the stock market is a device for transferring money from the impatient to the patient.” Without patience and basic understanding of how the stock market works, you will experience the greatest financial nightmare at an early stage of your investment.
Buying High, Selling Low (Ultimate Mistake). Self-explanatory it is, still many stock market participants, particularly speculators and day traders, do this in fear of losing more money if the stock continues to dive. Worse, they even transfer the capital to performing stocks that are almost or already on top, hence continuing the cycle of imprudent pulling out of investment until getting broke.
Stock market beginners must be aware of the cycle ‘what goes up must come down, and what comes down must go up.’ With this, the best course of action is to buy and hold quality stocks, blue-chip stocks maybe, which surely will storm out the stock market fluctuations. Buying during market dips provide opportunities for acquiring more shares, hence dragging the average price down.
Buying Low, Selling High (Rule of Thumb). As nobody can accurately predict the future trend of stock prices, historical data can be useful in determining the safe entry points. If your entry point is halfway higher than the support level yet the fundamentals remain sound, then take advantage of averaging down your position by acquiring more shares.
However simple the rule of buying low and selling high is, it is in no exception corruptible by psychological forces, primarily by patterns moving from fear to greed over longer periods of time. For instance, if your unexamined greed takes over, you can have an impulsive decision selling stocks at a good but not at the highest price.
Buying More Chips (Regular Investment). You slow down your financial journey towards your first million as you rely just on the first stash. You need to add more fuel. With regular investing, you can take advantage of making more profits from larger volumes. If you are doing Peso-Cost Averaging, then you can surely ride out the stock market fluctuations and make yourself worry-free about the dips and rallies.
In a disciplined practice, I make a regular deposit to my stock investment wallet and wait till the fund for the next purchase of shares is reasonably enough to save somehow from broker’s commissions and other fees. We also need the application of simple mathematics and accounting skills so for us to maximize our investment capital.
Rolling Over Your Investment Capital (Taking Profits). Holding stocks for a very long time, say five years or more, however strongly advised, still poses disadvantages. Doing so, you are simply missing out the resistance levels and historical peaks where you are supposed to sell your positions and take profits. In addition, businesses these days are confronted with novel challenges, not to emphasize much stiff competitions and uncertainties.
You need to set price targets to sell a block or all your shares of stocks. After taking profits, roll over the new capital with fresh stock positions. Yes, it’s a good investment strategy that even billionaire stock market participants employ. In another article, I described the process as regular rebalancing of stock portfolio.
Making Your First Million (Getting Feasible). So, can you really make millions in the Philippine Stock Market? Yes, possibly, and this possibility increases as you become more serious with your investment strategies and goals. Then again, it takes time and patience.
I have been investing in the stock market for over a year now and been applying what I share here in my blog. So far, I have my stock investment earning profits from dividends and price appreciation. Perhaps, three more years and I’ll have my first million from my stock market investment. Somehow, we should be ambitious!