Some may think that getting rich through business is pure luck and hard work. However, if these two are added with the right strategies, acquiring wealth can be achieved in a shorter span of time.
The Story of Aling Monay and Mang Coco
Aling Monay and Mang Coco are businessmen. They both manage their own bakeries. They both have a net income of around PHP30,000. Both of them spend PHP20,000 for their families’ living expenses. Both of them pay themselves PHP10,000 for a month of hard work. Aling Monay has been keeping her money in a savings account in a bank, which earns 0.50% per year. On the other hand, Mang Coco invests his money in the stock market, which earns an average of 10-12% per year. After six years of keeping her savings in the bank, Aling Monay has earned PHP732,705; while Mang Coco has become a millionaire with PHP1,090,681 in the stock market.
What is the ‘stock market’?
According to Investopedia, the stock market allows the public to invest or own a slice of ownership in publicly held companies by providing an amount of money as capital. It allows individuals to earn money without taking the risk of starting a new business. Thus, if you purchase stocks from Jollibee, you provide them with capital and at the same time you own a portion of Jollibee.
When companies are profitable, stock market investors earn by getting dividend from the company and by selling appreciated stocks at a profit called capital gain. When the companies lose money, the stocks’ prices decrease and the investor sells the stocks at a loss.
What’s the first step in investing?
You can buy and sell stocks by opening a stock trading account in stock brokers. In the Philippines, the top accredited stock brokers listed by UsapangInvestment.com include BPI Securities Corporation, CitisecOnline, F. Yap Securities, Inc. and First Metro Securities Brokerage Corporation. The minimum amount needed to start trading is as low as PHP5,000.
Investing directly in the stock market can be complicated, especially if you are a newbie. You may learn by researching online or you can ask friends who have been investing in the stock market to guide you. There are also organizations that offer guidance in investing in the stock market at a cost, such as Bo Sanchez’ Truly Rich Club.
Investing in Mutual Funds
If you are not confident to do the trading on your own, you can invest indirectly in the stock market. This can be done by investing in mutual funds or getting a investment-linked life insurance plan. The money you put in such funds are managed by experts and would still lead to higher passive income in the long run.
So, who’s example are you going to follow to jump your way to millions? Aling Monay or Mang Coco. Remember, it’s all about strategy!
Note: The story of Aling Monay and Mang Coco is purely anecdotal. It is meant to illustrate the difference in growth of funds in the bank and stock market. The interest rates are based on average prevailing rates. Inflation adjustments were not taken into account.