Investing in Experiences: Stock Market Challenge

Hi guys!

Today, I want to talk about JCFAP's Stock Market Challenge, a national wide portfolio challenge. The mechanics are simple. Participants must make a team of 3 and trade using the Investagrams platform. Each team will be given PHP 100,000 (virtual money, of course) to trade with. The goal of the competition is to get the largest profit from your portfolio starting October to December 2016.

At first, I was excited and optimistic in playing. My teammates and I have been investing for quite sometime and so we pretty much know the basics. However, trading is different from investing and this challenge made me realize that I'm not a good trader (at all). The challenge for us students is that, university demands a lot of projects and outputs from us that, in all honesty, it is hard to find time to monitor the market movement. 

We were mostly busy with activities, exams, and reviews. Sometimes, we tend to forget to check our Investagrams portfolio. Although we have enjoyed some gains, there were more losses than what was expected. This is also due to the current market condition - The US Presidential elections and other local government uncertainties greatly affected the short term volatility (or the price movements) of the market even though the company's are actually doing well.

The competition is still not over and we will still be playing with the SMC, but I realized that investing is the strategy that would work best for me. I would rather stay in the market for the longer term as this suits my financial needs more.

How about you? Are you a trader or an investor?

Disclaimer: This are my personal thoughts about the competition. Credits to JCFAP for the image above! :)

Investing in Experiences: Online Stock Trading Seminar

Last Monday, I attended the Online Stock Trading Seminar of the DLSU-D JFINEX. It's their annual stock trading seminar which aims to encourage students to create their on online stock accounts and start investing early. For 2 years, COL Financial has been their partner in spreading financial literacy and letting the community know that investing in stocks are not only for the rich and wealthy but for every Filipino! COL also set up a booth where student are inquire and fill up account forms.

Mr. Jed Velarde, a training consultant from COL Financial, was invited to talk this year. I really enjoyed listening to him and he gave us a lot of tips on how we should perceive the market and look at it from a long term perspective. He gave a lot of stories and analogies that were simple yet effective that both students and professors understood and related upon like comparing the amount of groceries you can buy then and now to explain inflation. He is such an engaging speaker and was able to even make students laugh at some of his jokes. 

I learned 3 important things from Mr. Velarde which are:

Be an Investor - Mr. Jed encouraged us to think of ourselves as investors in the stock market and not traders. Traders are usually does person who closely watch the market and day trade which is to buy and sell a stock on the same and gain profit through  share price appreciation. He told us that it would that, although there is nothing wrong with being a trader, it entails a lot of risks and as students who wish to maximize the growth potential of our portfolio we have yet to afford such risks. He recommend being an investor instead where you can continuously invest in the market.

Invest for the Long Term - We should also invest in the market with a long horizon in mind. The market is constantly changing however, in the end, its trend will always go up especially in a developing country like the Philippines which still has so much potential to grow moving forward. Which is why if you are going to invest now, keep in mind that you will doing so for the next 30 to 40 years into the future.

Do it Regularly - Invest in the market regularly. Mr. Velarde suggests monthly, quarterly or maybe semiannually and make sure to invest in stocks with good fundamental which will certainly continue to grow and be more profitable in the future. The trick to this strategy is to continue investing even if the market if high or low. COL Financial  believes that thru peso cost averaging you will be able to create a sizeable portfolio with low cost stocks especially in the long term and you may do this as well through their EIP.

So if you are a student and you are interested in creating your own stock account you may do so thru COL Financial starting with 5000PHP. Here's what you'll need to open one. I hope you'll find it helpful and see you in the next post! 

Disclaimer: This post is sponsored or anything of that sort. Also credits to the DLSU-D JFINEX for the posters and guidelines on the COL account requirements.

The Investing Perspective: What Are Stocks and How Do You Earn From It?

Although Filipinos recognize stocks as a form of investment in the Philippines, only few Filipinos are actually invest in the stock market. These might have sprung from misconceptions like "only rich people can afford to buy shares" or "I didn't finish a business course therefore I have no capability to invest in stocks" -- which I find really disheartening. Equity investments are good ways to generate profit and diversifying your portfolio and with proper knowledge, anyone (whether you are a student -- like me! -- or a working professional) can venture in it.

Stocks are simply define by a lot of authors and websites as an investors ownership over a particular corporation in which he invested in. For example, a company has issued 10,000,000 shares and you bought 1,000,000 which is 10% of the overall share. This make you owner of 10% of the companies equity. This is a from of capital structuring used by corporations in order to obtain much need capital so that they can continue to operate or expand their companies. There are 2 basic types of share: Ordinary share, which are common and gives its holder the right to vote during board meeting and Preferred shares which has a fixed dividend rate. Owners of preferred shares are prioritized when companies issue dividends. I want to focus this post to Ordinary share as they are more common and less complex.

Now that we've had a brief background of what stocks are, let's go over to how you actually earn from stocks. There are 2 common ways namely is through dividends and through market price appreciation.

Dividends

Dividends are portions of a companies earning which are distributed to shareholders. The gain from dividends depend on how many shares of stock you have in the company. Let's say that X Company's board of directors decided to distribute dividends amounting to 1 PHP/ share. This means that if you are invested in 1 million share, you get PHP 1 million less taxes.

Market Prices Appreciation

Your investment could also profit simultaneously through price appreciation. Let's say the you bought 100 shares of Y Company for 5 PHP. After several weeks the price per share went up to 8 PHP. the result gave you 300 PHP (8 - 5 = 3 x 100)  less of course taxes. The logic in this scenario is that you were able to buy the stocks cheaper than what they are currently priced in the market. This gives you an opportunity to sell them higher and realize gains from it. This method works well especially if you are a long term investor.

Now that you a have an idea on stocks, you're next step is to know When Should You Start Investing in it. Are you ready? Share you experience investing below!

Happy investing!


Disclaimer: The article is based on my personal opinions and experiences. the post is not sponsored or any of the sort.

Sources:
Dividends: http://www.investopedia.com/terms/d/dividend.asp
Stocks: http://economictimes.indiatimes.com/definition/stocks

The Investing Perspective: When Should You Start Investing in the Stocks?

To start, let's answer the following basic questions:

1. Are you knowledgeable of basic stock trading principles and terms?

2. Do you have investable money?

3. Are you aware and/or ready for the risk that comes with investing?

4. Ready to make it a long term trading a habit?

If you've answered YES to all four questions, then its evident that you should be starting NOW. If you've confidently answered YES, it means that you have the capacity to properly establish and monitor an stock and is more likely to gain profits than those that a not knowledge but a investing.

However, if you don't feel confident enough to answer 'yes', it is never to late for you to learn and

have a change of heart. Here's how:

Knowledge

If you are a student, I suggest you join or attend seminars conducted by the finance organization in your school -- if there are any. Most seminars are about the basics of investing. If you are a working professional, you will find that a lot of banks and financial institutions hold free investing seminars for you the attend to. Most of them also have investment products or funds where you might want to invest on. Stock brokerage firms will conduct seminars to teach you the basics of the market as well as how to use their trading platform. And lastly, if you are an OFW, there are webinars and live stream seminars conducted by banks or financial institutions that you will be able to watch online. 

If you want to test your trading skills without actually investing money in the market, you may want to try the Free Trials offered by online stock broker. You can also enroll in a stock trading school,if you have the time and resource to do so. In this case, try looking up Caylum Institute, a stock trading institute in the Philippines which caters courses and seminars to help you learn about the investing. I personally haven't enrolled in it. But I've seen it featured in some conferences I've attended and its key officers are well respected figures in the financial industry

Money

I want to emphasize the term 'investable'. This is very important especially if you are a student with no means of steady income yet just like me. Make sure that the money you will invest in stocks are surplus money (income or allowance less all deductible expenses). In short,  it should be your spare money. We don't want you borrowing money just to be able to invest or worst starve yourself just to save up for investing money.

Risks

As the saying goes, "the higher the risk, the higher the returns". This is very true in the stock market, which is one of the riskiest asset classes due to high volatility (degree in price changes) of the stock prices. This can make some stock prices rise 20% today and fall 15% tomorrow depending on market movements. 

with that bring said, if you plan to invest in stock, you have to be ready to won some and lose some. The key to lessening losses is  diversifying you investment portfolio. Invest in different market industries such as services, banks, property or gaming and also make sure to invest in strong and reputable corporations over fly-by-night ones.

Habit

If your starting early with investment horizon of 5 or more years, make sure to make investing a habit -- inculcate it in your lifestyle. I would recommend over investing a one time big time lump sum investment. This method will  better mitigate your cost in the long term. Remember to make it a habit to invest monthly, quarterly of yearly. It doesn't matter if the amount is small, what is important is that you create an attitude of habitual investing.

Time vs Timing

It's very important to distinguish this two concepts. I use the term "Time"to mean the actually start of your investment relative to how long you plan to keep yourself invested in the market. For example, the time I started investing was when I was 20 years old and I plan to stay investing in the stock market for the next 40 or 50 years.

I tend to use Timing to mean the market condition by the time you invested. Will you be starting when the market is high or low?  It is preferable to start buying when the market is low because stocks are cheaper but do not be discourage to invest even if the market is slightly higher because over the long term, there are still a lot of profit potentials especially for good stock picks.

Do you think you're ready to invest? Let us know! Leave your comments and questions below!



Happy investing!

Disclaimer: The article is based on my personal opinions and experiences. the post is not sponsored or any of the sort.