OFWs are generally leaving their families to find better job opportunities abroad with purpose of helping their loved ones. With their hard-earned money, they open savings account in the bank to earn interest. Others invest in mutual funds and real estate by buying house or condominium unit. However, investing stock market is one option to diversify your investment.
Because investing in stock market involves volatility and offers no guarantee, OFWs are generally quite reluctant to take the risk. Moreover, because of lack of knowledge, some people find the idea of investing scary and daunting. Therefore, it is important to seek help and advice before you begin your financial journey in the stock market.
Educate yourself before you invest
As newbie investor, the best way to minimize risk and gain potential return in the future is to educate yourself. How? Do research by addressing these sample questions that will guide you along the way.
- What is my financial goal of investing in stock market?
- Is the stockbroker accredited or not?
- Should I go for trading or investing for a long-term?
- When is the right time to buy and sell stocks?
These questions can be answered by searching Google, watching TV program on financial literacy (ANC on the Money and Peso and Sense are good examples), and finding mentor with investing experience. In my case, I subscribed to TrulyRichClub to guide me in my financial journey. You cannot afford to lose your money because you didn’t do your part and educate yourself as a future investor. As an investor, it is your responsibility to learn how stock market works.
How to earn in stock market
There are two ways to make money from stock market: dividend and capital appreciation. As stock shareholder of the company you are entitled to receive dividends depending on the performance of the company.
Capital appreciation on the other hand is the rise of price value per stock over time. Some stockbrokers provide online platform where transactions can be done online for clients. As an OFW in Saudi Arabia or Singapore, you will now have an opportunity to access your portfolio.
Have an emergency fund
It is advisable to have emergency fund for at least three to six months worth of your monthly expenses before you invest in stock market. For instance, if your monthly expense is 30,000 pesos you should have at least 90,000-180,000 pesos.
Your emergency fund will protect your stocks from unforeseen need like accidents, health issues, and unexpected expenses. In this case, you do not have to sell your stocks from time to time because you have emergency fund. It will also allow you to continue your current lifestyle without going into debt.
Deal with license firm and broker
With many fraudulent investment scheme, it is necessary to verify whether the stockbroker you are dealing with is accredited by Philippine Stock Exchange (PSE). A complete list of accredited stock-brokerage company can be found at PSE website.
Be sure to transact directly with a legitimate firm or its licensed representative. Before you open an account, be cautious about people who are giving you misleading claims and promising high return of investment in short period of time.
Stock investing requires discipline
Stock market investing requires a lot of discipline in the beginning. As an OFW, oftentimes you are obliged to send all the money to your loved ones. However, you need to set aside reasonable amount regularly to buy stocks if you want to grow your money.
The stockbroker like COL Financial usually requires a minimum amount of 5,000 pesos as your initial fund. Succeeding amount depends on the clients with minimal fee or bank charge. Investing in stock market will give you opportunity to be cautious on how you spend your money. Discipline and sound spending habits is another key to financial success.
“Dishonest money dwindles away, but he who gathers money little by little makes it grow.” Proverbs 13:11, NIV
P.S. 1 My book “OMG: OFW’s Money is Gone!” is now available for OFWs. Send your queries at email@example.com.
P.S. 2 Are you an OFW? I encourage you to join TrulyRichCub (TRC) if you want to be financially literate: Join TRC Today!