There are 2 ways to earn in the stock market which I will introduce you to. First is dividends (either cash or stock dividends) and the second is profits (Capital Appreciation) which you will gain once you sold your shares. Let me elaborate and explain this more. Dividends are basically the surplus money that the company gets (profits) and because of that, they distribute it to their shareholders/stockholders based on the number of shares they have. Just like what happened to me last week. LRI (Lafarge, a cement company) paid me 750 pesos (less 75 because of 10% tax so I only get 675) since I have 1,500 shares from them. They gave me 0.50 cents per share so if you do the math, 1,500 * .50 = 750. That’s the wonder of dividends!
What about the second one which is selling our shares after so many years of keeping it (5, 10 or more years). If you bought a share of ABC (a fictional company) that costs 10 pesos, keep it and then sell it after many years, you’ll surprise on how much growth your profits gain because the price per share might be 25 or 50 pesos. For example, you manage to gather 10,000 shares through continuous investing, and then when the time comes that you are ready to sell it, the 10 pesos before might be turned 50 pesos per share. So 10,000 * 50 = 500,000 (Five hundred thousand pesos). That’s a whopping huge amount of increase!
So I advise you while you’re young, you should try to consider investing in stock market. Of course, you should only invest in your hard-earned money to big companies like SM, Meralco and the like because these companies are stable and the possibility of getting bankrupt is slim.
I know you’re thinking that it’s difficult to go alone and invest by yourself. But I will show a way to guide you in your stock market investing. This is what I use and it really benefits me until now. Truly Rich Club of Bo Sanchez helps me on what companies to invest in and when is the time to buy or sell my shares. And that thing is none other than SAM Table (Strategic Averaging Method).
Don’t just spend your money recklessly and waste it on unnecessary stuff. Learn to make it produce its own kind.
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