Monday, April 22, 2013

Why We Need to Invest

April 22, 2013, PSE rejoiced with the new all time high of the Philippines index on the stock market. Seven minutes prior to market closing, the index went up to 2.35% to 7,120.48. 

Disclaimer: I am not a fund manager but I am happy with that news. Why? because it simply means that more and more people are making themselves equipped in financial literacy and have started their way to their own financial independence by investing. One of them is yours truly. Of course, the old timers too who have been around a long time, these foreign and local investors have been blessed by their winning stocks today.
Now on to my blog... All of us can be investors too! It is a myth to say that only the rich can be investors and can join the stock market bandwagon.There are broker companies nowadays that offers as low as Php 5,000.00 to invest in the stock market; But why do we really need to invest?

I'll tell you why... We need to invest so we can combat "inflation." If we are aware, every month news on tv, internet and the newspapers would announce the current inflation rate but most Filipinos don't even seem to bother, all you'll hear is the complaint about the rise in commodities. You might ask, well what is inflation anyway, and why is it important?

Saving in a bank will give you only 1.0% while you need to beat the 3.4% inflation as illustrated in the chart above

According to investopedia, inflation is a sustained increase in the commodities  year by year over time. It has been a common knowledge whether we like it or not.We can always complain to the government about that but actually the government can do nothing about it. That being said, there are three options we can do:

a. You can lessen your spending.
b. Raise the amount of  your salary or  
c. Invest your money in a legit financial vehicle.

If you ask me, "A" is possible. "B" could be possible, if your boss is feeling generous  or you can go overtime at work (unpleasant) but "C" is the best way to go! 

In order to beat inflation, we need to earn that absolute minimum of however much the inflation rate from year to year. What is the best investment vehicle to invest in you may ask? It depends on your risk appetite. I only choose stocks because stocks earns at least 3% a day, and can even give you as much as 50% if you know where to get it. Does that make sense?

Before I end my blog for today. I would like to congratulate our PSE and investors who have been smart enough to start already! Quoting from Aya Laraya, RFP and fund manager from colfinancial (formerly citiseconline), he said: "No matter how much you save, if you're not beating inflation it's useless." So, get to learning more and start now!

***First step to investing is to find a broker, and I don't know if I will be breaking the rules of blogging or what not but, if you'd like to learn more and start investing in the stock market, you can check out the website for goodluck!

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