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Build Your Wealth Thru Stocks PDF
Build Your Wealth Thru Stocks PDF
Many of us Filipinos are struggling in our daily financial status. Some of
us are born rich- either continue being rich or ended up being poor.
There are also some that are born poor - either stay poor or strived to
succeed. However, only a few of us are enjoying the benefits of being
wealthy through investing in stocks.
Did you know that there are only less than 1 million individual Filipinos
who are investing in the stock market?
I wondered why there are still many of us who are skeptical about the
subject of stock.
Did you find this subject “so good to be true”, “too abused” or
“undermined”?
Well, let’s take a deeper discussion about it and see how you can build
your wealth through it.
Based on your answers, you will know if you are qualified to invest in
the stock market or not. So, let’s see:
4. How many years are you willing to work to earn a living? Are
you young enough to do it?
To give you a wider understanding of stocks and the things that you are
curious about, let’s discuss it one by one.
Definition of Stocks
Types of Stocks
Stocks have two types, the common stock, and the preferred stock.
These two are different to each other. A common stockholder has the
right to vote at a corporate meeting plus he can also practice his
preemptive rights. In case a company declared bankruptcy, a common
stockholder is the last one to receive the share or what is left. On the
other hand, a preferred stockholder doesn’t have the right to vote, but
he has a higher claim than a common stockholder. Unlike a common
stockholder, a preferred stockholder is the one who is first in line when
a company is on bankrupt status.
Common Names of Stock
You may hear a lot of unfamiliar terms referring to stock such as equity,
equity interest, shares, common stock, stake, ownership and ownership
interest. These terms are being used in the stock market.
The stock market is similar to a typical market, there are sellers and
buyers as well as the middle man.
The place where buying and selling of stocks take place is called as the
stock market. On the other hand, the buying and selling of a
stock known as a stock trading. The place where stock trading is being
executed is referred to as the stock exchange.
There are three types of people in the stock market. The stock buyer,
which is you in this instance. The stock seller is the one who sells the
stock. Lastly, the stockbroker who acts as a middleman.
The IPO
Reasons Why Companies Issue Stock
There are many possible reasons why a company issue stock, here are
some:
1. To allow expansion
You can either take hold of your share or sell it anytime you want.
When the value of your stock increases, it is up to you if you will take
hold of that or sell it. The company will not control your share. The
higher the potential of the company you belong, the greater your
capital gains will be. You can also earn through dividends, which will be
discussed later.
Today is the right time to invest in a stock. If you are young, the best
time you have to invest. Timing the stock is just a myth. The stock
market has its ups and down, what’s important is you make your first
step in your wealth. Also, take note that you should control your
feelings when it comes to investing in stock, do not let your emotion
interfere That is why there are stock brokers that will help you analyzed
the market.
To Sell or To Hold
Selling or holding the stock may be the hardest decision you will make.
You need to analyze the market and avoid getting into conclusion.
When the stock price decreases, most investors think of selling because
the company is not doing fine. This may be just a minor setback. It is
still up to you if you will sell or hold the stock. Selling can also be
expensive due to taxes and broker’s fee. Holding the stock can also be
risky.
Ways to Make Money from Stock
There are two ways to make money from stock, the first is called as
capital gains and the other one is dividends.
Capital Gain
When you sell a product, you will have a profit. In stock, it is referred to
as the capital gain. This profit can be realized once the stock is sold. To
have a better understanding, let’s take a look at this example:
In the XYZ company, Juan has 100 shares. The company declares a
20 cents dividend to all shareholders. Juan will get 20 cents on
each share as dividend payment from the XYZ company.
You need to follow these 5 simple steps so you can start with stock.
Each step is completely discussed below:
As discussed earlier, you cannot buy your preferred stock alone. You
need the help of a stockbroker.
The stockbroker is a firm in which will buy or sell stocks on your behalf.
The firm will be the one who is going to participate in the Philippine
Stock Exchange. There are two types of a stockbroker, the online and
the offline brokers. You can make all your transactions through an
online broker, except for opening an online stock trading account with
a stockbroker firm. It is like opening a savings account in a bank
wherein you have to present yourself as well as some documents.
Opening an online stock trading account requires the following:
• Funding of account
• Buying of stock
• Selling of Stock
• Withdrawal of money
Now that you have an online stock trading account, the next thing to do
is to fund it. You can choose which type of account depending on the
stockbroker’s available accounts. The minimum amount required in
funding your account is 5,000php. You have 2 options to fund your
account, these are as follows:
• Online transfer
This is my favorite means of funding my account, especially if I am
always on the go. If you hate long lines and going to the bank
makes you uncomfortable, then you should do an online transfer.
It is easier, faster and more convenient to transfer money via
online banking.
• Bank deposit
If you prefer the traditional way of funding your account, you can
go to the nearest bank which is compatible with your
stockbroker’s bank account. After depositing the money, you
need to scan the bank slip and send it to the email of your
stockbroker for confirmation.
Once you fund your account, you can now go to the next step. For sure,
this is exciting for first timers.
Let’s get this part more exciting and try not to be overwhelmed. I have
to warn you, this part is a little bit tricky (because you are a first-timer).
However, do not be easily discouraged as this thing is very easy to
understand. So, what will you expect? You have to expect that you will
see a lot of numbers, figures and unfamiliar menus. Don’t worry, your
stockbroker will help you with this. You need to choose which stock to
buy, this is a little bit challenging at first. These are some guidelines that
will help you in choosing which stock are you going to buy:
After some time, you will see the changes in the value of your stock. It
will either decrease or increase. If you see an increase, then it is time
for you to sell your stock. To have a better understanding, refer to the
example below:
Juan invested in XYZ company for 1000 shares. Each share costs
P10, so he invested a total of P10,000. After a month, the value of
a stock of XYZ company goes up to P15 from P10. Juan can have a
gain of P5,000 if he will sell it now. So, he decided to sell it. Now,
Juan has P15,000 and his profit gain is P5,000.
In this case, the selling price is P15 higher than the buying price
that is why Juan has a capital gain.
When Juan invested, the buy price is a little bit low and when he sees
the growth on his investment he then decided to sell it. You can either
sell it or take hold of it. However, for a first timer- it is a joy to have
your very first sale. The increase in the stock doesn’t happen always,
there are also times that you will experience capital loss. It is important
also to have your target price so when that time comes, it is easier for
you to sell your stock. There are times that the price of a stock goes up,
but because of greed, some stockholders are hesitant to sell it and wait
for the time it will go up again. You should learn how to separate greed
in making decisions about your stock. The value of stocks fluctuate
from time to time, a stock can worth P1 dollar yesterday, P20 today and
becomes P10 tomorrow.
The stock market can be a complicated world, but it pays when you
have patience with it. It takes a lot of patience, deeper understanding,
experiences and a high tolerance of risks to stay in the stock market. If
you have a capital gain, then congrats on your first sale!
Step #5: Enjoy Your Profit
Filipinos always like to enjoy their fruits of labor so enjoy it. You can
withdraw your funds to your bank account, you need to make a request
from your stockbroker so they can make the transaction. You can also
leave your money in your online stock trading account and treat it as
your investment, so you can always buy a new stock. In buying a new
stock, you just have to repeat the whole process and be a wiser
investor now.
After reading this, have you already make up your mind in building your
wealth with stocks?
I know how skeptical you are right now, I’ve been in that situation too!
You have some doubts and that is totally normal. However, I wanted to
help you achieve what I did...
Now how can you invest effectively?
There Were Only Two Ways of Getting into the Stock Market, Until…
In my mind, there were only two ways to invest in the stock market: (1)
passive investing and (2) active trading.
With SAM, I’m introducing a third way. (I didn’t invent SAM. My mentor
did. He’s a billionaire who has done all three methods with incredible
success. The stock market has been his playground for the past 38
years.)
Reason? Eighty five percent of people lose money in the stock market.
That’s a fact. And most of those are active traders. Active traders buy
and sell stocks every day. I have friends who are successful active
traders, and believe me, they’re very rare. They trade fulltime, they
study every day, and they follow very strict rules. Without these rules,
active trading is gambling, period.
So what is SAM?
SAM uses the 4 Rules of Passive Investing, tweaks them, and adds a 5th
rule.
Buying stocks each month using your small monthly savings. It’s really
making the stock market your piggy bank. You do this long-term—for
20 years or more!
But in SAM, we tweak this rule. If you use SAM, there’ll be times when
you don’t invest, and choose to stay away from the market. These are
times when we believe the market is overbought and is going down.
We’d rather wait for the market to go down and buy when the prices
are cheaper.
Rule 3: Invest only in Giants.
In SAM, we tweak this rule too. Generally, we don’t buy penny stocks.
At rare times though, we find gems among them. And we make an
“intelligent speculation”. Because of its volatility, we only put “extra
funds” in these gems.
Passive investing means not buying one Giant but a handful of Giants.
Why? There’s such a thing as “Black Swan” in the stock market—when
an unexpected event happens. We don’t want all our money to be in
one company—and tragedy hits that company.
Rule 5: We buy when the price is beneath our “Buy Below Price” and
we sell when the price is near our “Target Price”.
In my Stocks Update Report, I’ll provide both the Target Price and the
Buy Below Price for you.
Passive investing looks only at how good the companies are. Active
trading looks only at the share price.
Passive investing never sells. Active trading always sells every day or
every week. SAM sells after a few months. We’ll give you the “Buy
Below Price” and the “Target Price” of each of our recommended
Stocks.
1. Faster Giants
For SAM, we’ll narrow down the list to five to six stocks only. Lesser
choices mean lesser stress for you!
Why narrow down the list to five to six stocks? Because not all Giants
are created equal. Some Giants are so gigantic, their growth may be
slower.
2. Lower Prices
Here’s a secret in making more money in stocks: You make your money
when you buy, not just when you sell. What do I mean? If you buy it at
a cheaper price, your earnings increase many times more.
How does SAM do this? I’ll give you a “Buy Below Price” for each of our
recommended stocks. This will prevent you from chasing a rising stock
all the way to the top.
3. Secured Profits
4. Nice Jackpots
And then there are jackpots. Lepanto (LC) was our jackpot stock this
year. My mentor mentioned it to me last December 2010—and I wrote
about it right away. If you bought when I recommended it last
December, you would have earned 157 percent by now.
SAM. But I told you that if you had extra money (that you’re willing to
lose if things go wrong), you can buy Lepanto (LC).
So what do you think?
Here are the top winners of Truly Rich Club in the previous years.
www.PinoyFinancialPlanning.com
Skype: luranski_19