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The Advantages Of Investing In The Stock Market - Part 1

Feb 2, 2008
Previously, I wrote a comprehensive introduction on how to invest in the Philippine stock market. The basic principles that each prospective investors should understand was exstensively discussed. Here, the advantages of investing in the stock market, will be tackled.

As I said mentioned previously, the stock market is just another vehicle of investment. You might be wondering what is the reason why you should invest in the stock market? Is there an advantage in investing in the stock market ?

The following reasons could probably answer the above question. Take note, examples given refer to Philippine based companies and currency. If you wish to view the entire article please visit my blog.

1.) The allure of great returns - Most financial expert would tell you that in a bull run the market really goes up. Average returns could be as low as 30 % and as high as 200 %+ per annum or even more. Profit is always expected when you invest in the long term. For example, In 1997, the Globe Telecom Inc. (GLO) stocks price per share was only P152.00. during that time you only spend P 1,520.00 to buy the minimum board lot which is 10 shares. Currently the price per share of Globe is P 1,620.00+. The value of those 10 shares that you previously bought is right now P 16,200, meaning in ten years time your money has grown ten times. This is translated to an average of 30 % return per annum. This is far bettter than putting your money in a time deposit account at less than 4 % per annum. It is interesting to note that the Philippine stock market is at its highest these days. For the next 2 to 3 years, they say the market will still be in a bull run. Make the best out of this situation.

2.) You become "part owner" of the company that you are investing in. - You might probably be thinking of franchising a Jollibee outlet. However doing so would cost you somewhere between 20 to 25 million pesos add to the fact that you have to put in time and effort to run the store. Why not buy stocks of Jollibee instead of franchising a Jollibee outlet in order to own your "own" Jollibee. You get to own 100 JFC shares (Jollibee Foods Corporations - JFC) for only P 5,000+. In so doing you "indirectly own" the more than 1414 stores in the Philippines and 175 in other countries including Red Ribon, Chowking, Deli-France, A popular fastfood chain - Yonghe King in China and popular teahouse chain from Taiwan called Chun Shui Tang including Jollibee's pilot restaurant "Tio Pepe's Karinderia." Now that is so cool! The next time you eat at Jollibee you could proudly say to your friends and relatives that you like to eat there because you "own" part of it. You more be more prompt in paying your telephone bills if you own stocks of PLDT or Globe telecoms.

3.) Being part of a "Special group" -

Everytime I am asked to join a multi-level marketing scheme, I want to know when the company started. I believe that if the company started a long time ago, I will have lesser chance of recruiting other people since most people that I know has already been recruited.

However take note that investing in the stock market is not mutli-level marketing. Whether the market is saturated or not does not matter. But it is always good to know that we are among pioneers to take advantage of the pontential of the market.

According to Asian Development Bank as of 2005 only 600,000, out of the of the country's 87 million population, invest in the stock market. That's less than 1 % or roughly around 0.7 % It can also be observed that most of the market players are from the Class A and B segments.
About the Author
Do you wish to know more about how to invest in the stock market ? Zigfred Diaz regularly blogs about this topic as well as other interesting topics such as law, leadership, entrepreneurship, management, finances, investments, technology, internet marketing, blogging and faith. Visit his blog today.
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