|photo credit: seminarphilippines.com|
When I read posts in Facebook groups on stock market investing, especially from newbies, I also myself wonder why do we have so many stock market investors, old and new but still few reach the pinnacle of success.
Then I tried to search for answers.
Here are my thoughts on why only few got the success almost everybody wanted.
When people started investing, most did not have fixed goals for investing. Most people invested because they want to become rich. How rich do they want to be? Most don't have answers. So when the time they saw that their money grows or had profits, they withdrew the money, some all, some left something so they will still have money that may take profit from. Some think, as well as I had thought so before, that once I get my initial investment and spent it then it will be okay if I lost all my fund as I have already enjoyed my initial investment. The growing of funds stops and eventually the excitement and we get demotivated.
Other investors would tremble in fear when the value of his
share dropped by a margin. Sometimes even 1% margin will give them chills and withdraw just before the share price bounces back. The bad thing here is they stop learning from that experience and blames the experts for fooling him. I am once guilty of this attitude.
One reason based on my studies around the internet that most of those who succeed not just in investing but in building businesses as well, have invested more money during hard times.
Just like the story of Henry Sy and his SM Megamall, this story may not be about stock market investing but you may be able to learn something from it. When he started plans on putting up a big mall during the hard times, most of the critics told him that it may not be profitable based on the current situation of the country. The country was in turmoil. But Henry Sy saw it as a chance of a lifetime as the price of the land was like on a big sale. Prices of construction materials to labor will not be too high so he decided to pursue and the rest is history. SM Megamall started the boom of his millions.
It is the same when it comes to stock market investing, when the market goes down, take advantage of it. It's like the prices are on big sale. Once the market goes up, you will be able to gain profits.
As one of the greatest investor have said, "We simply attempt to be fearful when others are greedy and to be greedy when others are fearful."
I really did not understand him until I started to notice the increase in my investments made during tough times in 2009 when the economy was almost at its lowest. I decided to invest even when some friends were against my plan. I really didn't know what will happen yet I pursue just following quotes from my uncle Warren. (In my dreams he is not just a mentor but an Uncle, winks...)
In 2010, my investment almost doubled, the time few of my friends invested as the media was giving news that the Philippine economy will continue to rise.
As of writing, the first investments I made has 400% return when my friends are raking around 50% gain.
There are two types of investing styles to gain profit in stock market wherein you don't really have to take big risk. This will be my strategies as of the moment until I have my time to do fundamental analysis. One is money cost averaging, investing same amount of money monthly and buy-and-hold strategies.
I will buy from big companies where I think they are almost at their lowest but certain they will grow within the next 5 years and probably get the shares until the time I think I will get some to invest in other areas. With money cost averaging, I will have to do it on mutual fund companies. For risk reduction, spreading my investments in 3 different mutual fund companies with different investment strategies and 3 stock market investments in 3 big companies will be enough.
"Time not timing is the better ally to help build wealth for your family. Building wealth requires a lot of discipline and time."
Getting rich-quick is almost what all of us wants. Though, there are lucky persons who had their luck of getting rich quick like the lotto winners, most of us who desperately wants to get rich quick ends up being scammed.
Also, most of the lucky lotto winners will go back to poverty sooner or later because they have not acquired the wisdom of taking care of the money they have. (I'll try to write later on some well known lotto winners who went from rags to riches to at worst miserable/death).
In stock market investing, holding on to your investments while you are still able is the surest way to gain wealth.
Based on statistics, the market may go up and down but on the average it will still go up, beating inflation. It will still be the best way to have your money work for you.
Time and discipline will be the best ally. When some assets will be able to supply for the needs of the family, then studying more on fundamental analysis on stock market investing may be focused on to gain more profit in stock market.
So, in conclusion, buying a share in companies which will be around in 5 to 10 years and holding them on will be the best way to earn in stock market or mutual fund. Investing same amount of money or money cost averaging method through Mutual Fund Companies is next. Take it from Uncle Warren buffet who said "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years"