How do you make money with stocks? That is a question that a lot of people are asking now. Not a lot of people invest in the stock market because they think that they could easily lose their hard earned money. That is true. People lose money because they are uninformed and jump right on investing without understanding how the stock market works. So how do you prevent losing money and make money instead? Here are ways to make money in the stock market.
1. Buy IPO
IPO or initial public offering are shares that are newly listed on the stock market and are being offered to the public for the first time. This is good way to invest your money. Here is a good example.
Jollibee share price started at 6.56 per share. So if you had Php10,000 when they initially offered their shares to the public, you would have 1524 shares. Today the price per share is 251 pesos per share. Multiply that with your number share and the value of your investment today is 382,524.
If you invested more then obviously your profits are much higher.
2. Divident-stocks investment
There are public listed companies that give their shareholders a cut of the profits. Dividends can go as high as 8%. The higher number of share that you have, the higher the dividends.
Here are just a few public listed companies that offers dividends in the stock market
- Megawide Construction (MWP)
- San Miguel Corporation (SMC2B)
- Phoenix Petroleum Phils (PNX3A)
- Leisure and Resorts World (LRP)
- First Gen Corporation (FGENF)
3. Day trading
This is a type of trading where you buy and sell stocks within the same day. Experience day trader uses large amount of money and take advantage of small price changes in the highly liquid stocks. It is highly recommended that you learn the ins and out of this method before engaging in this type of trading. You have to invest a lot of time watching the stock market to make a profit.
4. Buy and hold
This are for investors who are in it for the long run. This involves putting large amount of money in the stock market and leave it there for years. Remember my example for Jollibee? You have to choose a company that has a great potential to grow. Here is another example.
PLDT started offering their share at 15.75. Today the price of a PLDT share is at 1340 pesos per share. Using the same value of Php10,000 investment you would gave gotten 634 share when you bought it during their IPO. Multiply the current stock price to number of shares and your share value is at 849,560 pesos.
5. Cost averaging
This method will help you develop a habit of investing. The idea is investing the same amount of money every month regardless of how much the price of that particular stock is. It doesn’t gurantee that you won’t lose money as the price per share might increase on the succeeding month but instead of investing a lump sum amount, you can start investing small amount first. Important thing to remember us that you invest regularly.
If you started investing on January with a fixed amount of 1000, your total number shares by June is 365.89. If the value of the stocks by July is at 21, then the total value of your investment is at 7683.63.
If you invested 6000 on June your total number of shares is at 352.94 and if you decide to sell it the succeeding month at 21 per share then value 7411.76.
I know what you are thinking. It is not that bad. I agree. However that is because the share price increase from June to July. If the price went down it is a different story.
The main advantage is that you don’t have to shell out big amount of money with this method.
When I first started working way back in 2001, it was an age before the Internet. That means you to get you information the old fashion way. You either learn using a book or get the information from an expert. Information back then was not that accessible. Needless to say I made some stupid investment decision.
I invested my money in a networking company that promises commision when I recruit somebody. I was sucker. The money that invest went to waste. If I knew back then the potential of the stock market, then I would have invested my money there instead.
Financially, I might be in a better situation. People today are lucky that they can get their information really quickly. How I wish it was available when I first started working. Before diving into the world of stock market, learn the strategies in investing. Learn from Warren Buffett. Grab one of the books and read up before investing.
What are your thoughts? Hope you enjoy the stock investment strategy in this post.
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