Have you heard about investing but are afraid to jump in because it seems risky? Getting into something you don’t know can indeed be scary and risky. However, there are ways to grow your money in the stock market while still managing your risks. Find out how in this article.
While investing in stocks is one of the best ways to grow your money, many Filipinos are hesitant to invest in stocks because they’re afraid of the risks that come with it.
The good news is there are ways for you to take advantage of the high returns from stocks while still managing your risks so that you can invest comfortably and not lose sleep over it.
Check out these few tips:
1. Invest for the long term.
If you’re new to stock investing, you can start by setting a longer time horizon as investing for the short term may pose higher potential losses, especially if you’re not yet familiar with investing or trading strategies.
Studies show that staying invested for longer periods of time can help reduce your losses. If you’re starting out young, having a time horizon of 20 years and over can give you higher positive returns than what you can get by investing in a shorter period of time. This is especially helpful if you are building your retirement fund.
If you are a parent, on the other hand, you can set aside the monetary gifts that your kids receive on their birthdays or during the Christmas season and invest them on their behalf. Then when they get older, you can gift them the funds that you invested as a way to help them start to become more independent and responsible financially.
However, if you’re the type who is very careful about managing their risks and prefer a shorter term period for investing, only use money you will not be needing immediately to protect your capital and peace of mind.
2. Diversify.
You’ve heard it before: “Don’t put your eggs in one basket.” This very well applies to managing your risks when investing in the stock market too.
Spread out your investments across different asset classes, sectors, exposure, or even time horizon. You can start by investing in two or three stocks that belong to different industries.
Another simple way to start is by investing in funds, where a professional fund manager takes care of choosing which stocks are best to buy depending on the fund’s objective. If you’re starting out by investing only a few thousand pesos first, investing in funds can already give you a diversified portfolio that fits your budget.
3. Be careful about buying stocks based on tips.
Go to YouTube, TikTok, or Facebook and you will find various gurus sharing stock market tips and recommendations. It's easy to get influenced into buying speculative stocks they recommend, especially when they hype you into thinking that the stock's story is positive and likely to go up quickly—well, don't be fooled
Don’t immediately jump into it and be very discerning about following their tips. Yes, some stocks do go up quickly, but they can also go down just as fast. When this happens, you can end up getting stuck or selling at a loss as you take your chances with other investors who want to sell the stock as well.
4. Avoid borrowing money to invest.
One of the popular strategies to enhance your returns when investing is to borrow money either through a margin loan for stocks or through leverage for forex and commodities.
While there is potential to increase your returns, it can also increase your losses when prices go down. Not only that, but buying stocks using borrowed money also increases the risk of losing all your capital—making it harder for you to recover.
Ready to take the next steps?
List down your life goals and plan how much you can set aside for your savings & investments each month
Set your time horizon and know your risk appetite to make it easier for you to identify which investments best fit you
Start investing by opening a COL account, and take advantage of the tools and guidance available so you can learn how to invest to meet your goals
About Col Financial
COL Financial is the Philippines’ leading online stockbroker, offering stocks, local funds, and global mutual funds at www.colfinancial.com. COL is trusted by nearly half a million customers, and has reached hundreds of thousands of Filipinos in its advocacy of increasing financial literacy. To start investing with COL as your wealth-building partner, go to signup.colfinancial.com today.
About Us
Financial literacy implies a mix of mindfulness, knowledge, expertise, attitude, and behavior important to make sound money-related choices and eventually achieve individual financial prosperity.
We are calling to bolster Filipino women's financial literacy by helping them upgrade their knowledge, skills, motivation, and confidence.
What better way to do this than through financial education.
Leading experts in the business, corporate, and financial sectors share their financial proficiency to help Filipino women improve their knowledge of financial concepts, financial products, and financial risks.
By enhancing financial literacy, Filipino women will be more aware of money-related opportunities to make better-informed decisions, know where to go for help, and to take other effective actions to improve their financial well-being.