5 Stock Market Myths Debunked
The Philippine Stock Exchange (PSE) was established in August 1927 as Manila Stock Exchange (MSE) and it is one of the oldest stock exchanges in Asia.1 However, less than 1% of the Philippine population is invested in PSE.2 Why is that?
Despite the overall good performance of the PSE over the last couple of years, Pinoys’ misconceptions about stock investing still remain and that hinder people from investing and growing their money properly. This blog post aims to expose the 5 common stock market myths and debunk them.
Myth # 1: “Investing in the stock market is just for the rich.”
The perception of how much money do you need to start investing in the stock market is one of the biggest hindrances of Filipinos in starting to invest. The truth is, you only need P5,000 in order for you to open an account in some of the biggest online stock brokerage firms in the Philippines. With that said, the ordinary Juan has the opportunity to be a part of the country’s growing economy and one can start investing even without millions.
Myth # 2: “Investing in the stock market is like gambling.”
The stock market index consists of 30 of the biggest companies in the country and some of them are Ayala Corporation (AC), Jollibee Foods Corporation (JFC), Manila Electric Company aka Meralco (MER), Philippine Long Distance Telephone Company (PLDT), SM Investments Corporation (SM), etc. In stock investing, you are placing your money to these profitable companies that already stood the test of time so your money will grow. On the flipside, gambling is to bet a sum of money in a game of chance. As a shareholder, you are being part of the growth of the companies you’ve invested in and not playing in a slot machine hoping to win the jackpot.
Myth # 3: “I have to watch my investments like a hawk.”
One of the misconceptions in stock market investing is you have to watch your investments every minute in order for you to win at trading. Not true at all. In stock market investing, you don’t have to watch your investments every now and then in order for your investment to grow. In fact, even if you don’t watch it in few months or in a few years, your money will still grow. It basically boils down to your investment goals and buying and selling strategy. In my case, there are times that I am not seeing my stocks because I am busy with my work and my daily life but I didn’t lose money because of that. Don’t let this misconception take away your social life or hinder you in investing.
Myth # 4: “Stock market is a scam.”
A scam is a term used to perform fraudulent or deceptive act usually with a purpose of getting money from people. Usually, a scam offers guaranteed high returns on a regular basis and with a low risk. The stock market works otherwise. In the stock market, the returns are not guaranteed and it is not issued on a regular basis. The returns in stock market depend on capital appreciation or dividends. Also, in the stock market, the money is being placed in the biggest corporations in the Philippines whereas in scams, no one can really tell on where they put your money or how exactly can you earn from it.
Myth # 5: “Stock market is hard to understand.”
This statement might be true in the yesteryears as information was limited back then. However, technology has dissolved the roadblock of the average Filipino to invest. Today, most of the information is readily available on the Internet and it can be accessed through the flick of your finger. Do your research more to understand stock market more as the more information you have, the more you will be educated and it can help you make better investment decisions.
1“About PSE”. The Philippine Stock Exchange (PSE). http://www.pse.com.ph/corporate/home.html?tab=0
2 Dumlao-Abadilla, Doris. “Online stock trading gaining ground in PH”. Inquirer.net. http://business.inquirer.net/231246/online-stock-trading-gaining-ground-ph