Everything You Need To Know Before Making an Investment

While the action of buying your first stock is easy, investing successfully in the Philippines is naturally a tough process which is why stock brokerages are there to guide you through the whole process. Brokers exist so that they can act as a consultant for all of your financial investments and give you necessary advice when to sell and buy your stocks.

It will take a lot of patience because you will have to educate yourself about the environment you are delving into. You will also need to learn all the crucial terms and strategies so that once you make your first investment you have gained the ability to manage and anticipate the effects of the market trends surrounding the stock market.

A lot of factors are in play when stock market is involved so before proceeding on your first investment, here are some helpful advices to help you get started and lessen the result of losses.

Start Small

It would be a great strategy to start small with your first investment and grow it over time. This practice will allow you to limit some possible losses and help you familiarize the changing nature of the market. And in case of making a few mistakes, it wouldn’t cause a significant blow to your investment.

Buy What You Know

A basic investment rule that you should keep in mind is to invest in businesses that you understand. For those who are just starting out, this is an important rule to apply. This is where an exhaustive amount of research should be dutifully applied. Dig deep and look into the business models of the companies that have such large stock holdings. You’ll likely gain insight on how each of them perform and do well within the stock market. Choose those businesses that you understand so it will be easier for you to identify if there are red flags to take note of.

Look for Red Flags

As mentioned above, choose stocks from businesses that you are particularly familiar with. But even so, you should also watch out for red flags. Don’t choose stocks if the company whose stocks are decreasing based on a 3-year / 5-year chart), or a company that doesn’t earn any profit, has debts and has an unstable dividend history.

In addition, take the time to evaluate its past performance. While it may not have a considerable effect to the company’s future performance, some of the patterns do reoccur and must be taken into account. You can also look on a more positive aspect of the business; the stock with a history of increasing dividends has the probability of reflecting its earnings growth in a more consistent pattern.

Invest in a Mutual Fund

One of the advantages about online stock brokers is they allow clients to invest in a Mutual Fund. This type of investment fund has hundreds of different securities and is made up of a pool of money collected from various investors. This fund will allow you to invest in the stocks with minimal risks, a good alternative for someone who is still beginning to learn the workings of the market.

Investing is a skill you need to grow over time so always stay open-minded and never stop learning; because even the most experienced investor still takes their time to learn new topics about how the market works and continuously digest new information.