There’s a saying that, “The best time to plant a tree is twenty years ago. The second-best time is now.” The same goes with investing. Investing is like planting a tree. The earlier your start, the higher the possible returns because of compounding returns. This enables your money to grow in an exponential manner over time. The longer you invest, the bigger the impact of compounding returns over time, giving you the opportunity to ensure inflation is left behind.
If you’re just starting to invest, you don’t have to immediately start big. You can start with as low as P1,000 to P5,000 and build it up over time. One good way to do this is to set aside an amount each month that you’ll commit for investing.
Remember that in the stocks market, the longer you stay, the lower the risk in general.
When picking a stock, the most important criteria are the company’s sales and profitability. You want to own a stock from a company that will keep growing as they continue to sell products that are needed and loved by their customers.
Stock prices go up and down, but these sharp movements do not really affect the business operations of the company. Armed with this information, you can capitalize on these sharp price movements to accumulate your favorite stock for as long the company’s growth story is intact.
Remember, we want to be part of the company’s growth story for the next 5, 10, or even up to 20 years. Short-term prices are not a concern of a long-term investor. It's important not to impulsively buy stocks just because the price jumps erratically overnight, especially when you don’t know the nature of what it does as a company.
As a new stock market investor, we recommend having at least 5 stocks in your portfolio. It is advisable that these stocks operate in different industries and have a different set of owners. This is what it means to have diversified holdings and we do this to lessen the risk.
If your budget to invest is limited, consider investing in one company per month until you have at least 5 stocks.
Companies shown are for visual purposes only, not a recommendation.