History has proven that investing in stocks over the long terms provide bigger returns and safety against inflation than any other fixed-income instruments like savings accounts, time deposits, government securities and bonds.
Two Ways to Make your Money Grow in Stocks:
First, Capital Appreciation. This happens when the stock prices in the market increases. The yield or profit of the stock is obtained by deducting the purchase price versus the current market price of the stock.
Second, Dividends. When a company profited more during a fiscal year, chances are their stockholders will get greater dividends from shares they bought from that company. Companies distribute dividends in two types. These are in cash or stocks.
What is the Best Time to Start Investing in Stock Market?
Time is the most precious asset when investing in the stock market. The younger an investor starts, the more chances for them to grow their money.
Compounding (compound interest)is the most important reason for an investor to start right now in the stock market. It is considered as the multiplier effect that happens when earnings on investments begin to generate their own earnings.
This is the time that you let your money work for you. Investing helps in ensuring a financially secure and stable future.
Sample computation of a longer term investment:
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AGE: 25
Length of Investing: 10 years
Total Annual Investment: P60,000
Overall Total Investment: P600,000
Value of Stocks at 65 years old: P20,189,953.00
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AGE: 35
Length of Investing: 10 years
Total Annual Investment: P60,000
Overall Total Investment: P600,000
Value of Stocks at 65 years old: P7,784,101.00
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AGE: 45
Length of Investing: 10 years
Total Annual Investment: P60,000
Overall Total Investment: P600,000
Value of Stocks at 65 years old: P3,001,108.00
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If you invest your money in good stocks for a long term and reinvest the dividends you received yearly, your money will grow exponentially over time.
By setting aside some of your monthly income, like the computation above wherein the total annual investment reaches sixty thousand Philippine pesos. These will be divided into twelve monthly investment deposits into your trading account from your stockbroker. That is equal to five thousand pesos monthly savings for your investment portfolio (P5,000.00). Others even choose to save two thousand pesos (P2,000) monthly for their trading account. Yet, it only takes two thousand to invest in the stock market.
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