Benefits of Investing in the Stock Market
It has been a year since I started investing in the stock market. (Though real monthly investing was only done after I transferred to my current job). I opened an account in COL Financial last May 2012, only after I received my mid-year bonus that time, but wasn’t able to add amounts to it until September 2012. And I am just amazed of how my portfolio grew within eight months’ time, that I think it is worth sharing to the world. According to my self-made “investment computation template”, my investment grew by 27% as of April 2013. I do a monthly assessment of how my portfolio performed at the end of each month. This practice motivates me to be faithful in putting little amounts each month to achieve my lifelong dream of being financially free. So for this post, I first would like to list down my personal thoughts on the benefits of investing in the stock market, aside from the end goal of obtaining financial independence, so as to encourage those readers who also wants to achieve the same thing:
1. It’s an almost effortless way of earning
I read over financial books that there are two types of income. Active and passive. Active income is what we get in exchange for putting out our effort, skills, and time to work. Example is our corporate job. We get our monthly salary because we render service to the company we are working. Passive income however, is the opposite. It’s the income you earn even while having a vacation elsewhere, or sleeping in the comforts of your home. Examples are interest and rental income. With stock market investing, it’s not working for money anymore, but letting money work for you through the magic of compound interest! According to the PSE Primer on stocks, history has proven that investing in stocks over the long-term provides potentially higher returns protection against inflation than other fixed-income securities, such as savings accounts, time deposits, government securities and bonds. Note: Investing in the stock market is always risky. It’s always advisable to learn, learn and learn; study first before buying stocks. But no worries, the internet is very rich with informative and useful content on stock market investing. Even COL Financial frequently issues “Investment Guide” that is investment-friendly and easy to learn to guide its investors.
2. Focusing on what matters most
My way of spending my monthly income is with this format. First and foremost is my commitment to give back to God through tithing. Second is for my monthly investment. And the rest is for spending. Others call it the 10-20-70 rule. But I do not restrict myself on those percentages. As a result, I deprive myself the right to indulge on “unnecessary” expenses such as expensive clothes and shoes, and coming up with the trends of each new gadget. (I indulge on books, instead! ) Since I have limited money left to spend, I am able to appropriately allocate what’s left to what I and my family need the most. In this way, I am also able to practice the ability to delay gratification, which is essential for wealth building. This also supports my core value of simple living.
3. It opens up to a lot more about financial independence
Because of my desire to learn about stock market investing, and since it is inseparable to a lot more topics about financial independence, I am now more knowledgeable about a lot of ways to achieve my dream. It increases my financial wisdom that I can apply in my life and share to other people.
There are still a lot of advantages of investing in the stock market; these are just personal reasons that fire up my desire to be faithful in investing. Perhaps a priceless benefit is the sense of peace that overwhelms me knowing that I can give more, because I am able to earn more. And knowing that I have a secured future ahead.
Before I end, I’d like to share Bro. Bo Sanchez’ words:
“Success is achieving your dreams. Significance is helping others achieve their dreams.”
May we all live a life of significance! :)