MONEY MATTERS : 2 WAYS TO MAKE MONEY IN THE STOCK MARKET

It's been a while since I posted an entry for Money Matters series so here it is! By the time I am writing this, I was about to give my first mini-talk to a few close friends about basic stock market stuff and personal finance. I pray that things will turn out well. Anyways, that will be more of a coffee table chat. Nothing super formal but nonetheless, I wish I will put across important info and tips that will somehow inspire them to save and eventually, invest! 

There's a huge difference between saving and investing and if you haven't seen it yet, here's my separate post concentrating on that topic, click HERE. 


Moving on, some people think that there's a lot to be learned about stock market. TRUE... That stock market MAY be complicated to some extent... TRUE. That you need to know everything to be able to earn from stock market... FALSE!

You need to be familiar on some basic things on stock market but to know everything BEFORE you can earn? FALSE again. We don't need to know everything about lipsticks and makeups (like its ingredients and its whole manufacturing process) BUT we still enjoy (benefit from) them right? 

2 WAYS TO MAKE MONEY IN THE STOCK MARKET

 CAPITAL APPRECIATION

 Now, I don't want you to be intimidated by the term. On its simplest form, it just means that you bought Jollibee (JFC) stocks last month at Php 100 per share and today, it's Php 110 per share. This means that for every share you'll have a profit of Php 10.00.  And if you bought 100 shares of JFC, you can have Php 10 x 100 = Php 1,000 profit when you sell it today.

That's it! We buy at low price and we sell at high price. Even the most knowledgeable stock trader works with this formula in mind. That's all there is to it. We'll put in our money for quite some time and when the price is high, we'll sell them. If you'll ask me if this is guaranteed, of course the answer is no. 

This is the reason why its best to invest in blue-chip companies (Jollibee, SM, Ayala, Meralco) - the percentage of capital appreciation is 100% for the last 10 years. Case in point, Jollibee's price (per share) last 2010 is Php 47.50 and today, it's price is Php 124.00. This translates to Php 76.50 profit. Beat that! :))

  DIVIDENDS

If you are familiar with the board game Monopoly, you may have encountered the word. I teach Corporation Accounting and this is one of the topics being covered by the course. There are different types and rules but those are not necessary for this blog post. As always, I want to make things simpler - so I think of dividends as bonuses (Business is doing well so here's your share!)

Objectively, it is a sum of money paid regularly by a company to its shareholders (that's us!) out of its profits. Picture above is a copy of my own NOTICE OF CASH DIVIDEND. I bought some shares of Metrobank (MBT) last month and while there's a buzz that MBT will declare dividends, I'm a bit surprised that it's Php 1.00 per share (I'm expecting an amount lower than this, so thank you!). There's a withholding tax of 10% so if you have Php 1,000 total dividend, what you'll get is only Php 900 (Php 1,000 - Php 100 tax). Sum will be credited to your COL account. To know more on how to open a COL Account, click HERE.

So there you have it - 2 ways we're making money in stock market. I've heard someone said: THE SECRET TO FINANCIAL SUCCESS LIES WITHIN YOURSELF. And I've heard my Lola said: GOD HELPS THOSE WHO HELP THEMSELVES (Nasa Diyos ang Awa, Nasa Tao ang Gawa).Very. Well. Said. ☺

Hope you've learned something today. God's people are destined to be rich! We're getting there! -CMK