Basic Investment Principles In The Stock Market - Part 1 Of 4

A lot of people have asked me on whether they should invest in the Philippine stock market. Most of those who asked also wanted to know how to start doing it. I do not know if they are really serious about investing or if they are merely curious about it since it has been given emphasis lately considering its very positive performance.

The Philippine stock market or the stock market in general is not a child's play ground. If you are a true investor, you must have expectations as to how much you are going to earn for a certain type of investment. This is measured in terms of how much your money will grow at a certain period of time. (The most common measure being interest per annum) Since the Philippine Stock market is at its peak for months now, people think that they should join the party even they do not understand how it works. They are even naive with the basic principles involve. This is not to say that you should be an economist before you start investing.

What you should understand is that you must know the basic principles involved first before you can achieve a level of success in investing in the stock market. Fortunes are made on the Stock market. But take note that huge losses are also incurred. Those who just plunge into the stock market without a grasp of the basic principles of investment end up convincing themselves that the stock market is no good at all, does not make them any money and finally quit after some time.

Let us not begin first by discussing the "how tos" in investing in the Philippine stock market. Let us first understand the basic principles of investment so that we might enjoy trading and be successful in the stock market. There are ten principles involved. We will talk about the first principle here. Other principles will follow in the next articles. Visit my blog if you want to see the whole article.

1.) You must realize that the stock market is just another vehicle of investment - There are several investment vehicles where you could place your money. One is not more superior than the other. They have their advantages and disadvantages, but this will not be discussed in depth here.

The stock market belongs to a category called "Capital Markets." In the Capital Market there are several vehicles wherein you could place your money in order for it to grow. You could place it in bonds, pension funds, insurance, real estate, different types of savings and time deposit accounts and of course the stock market. Why is it important to know this? Well, you should know the different types of investment vehicles under the Capital markets in order for you to determine whether or not you should invest in the Stock Market as there are other vehicles of investment.

I reiterate that each vehicle of investment has its own advantages and disadvantages. I did not to place all of my eggs in one basket. Most of my investments are in the Capital Markets though. This includes bonds through mutual funds, the stock market, insurance, pension and deposits.

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Zigfred Diaz is a financial and real estate broker. He writes on several topics in his blog including financial management and investing in the stock market

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