A beginners guide to stock market pdf free download

You don't want to be the old employee working as a door greeter at your big chain department store. It will also be frustrating and very depressing if you are not financially. The stock market has its peculiarities. It's a world where a small matter has the potential of creating a massive impact. One thing added or one thing left out could be the difference between making a million dollars and losing it all.

There is no shortage of investors. The world. It will also be frustrating and very depressing if you are. Want to get started investing in the stock market, but aren't sure how to do so?

What are stocks? What determines their market prices? Why do they go up and down? How can I beat the stock market? What are mutual funds? What are index funds? What are Exchanged Traded. Do you want to learn how to make passive income in stock market investing as a complete beginner? So in effect, by declaring dividends they are also paying themselves. Capital Appreciation or Capital Gains The second way is through capital appreciation.

This simply means that company you own is worth more than when you bought it. Two years later, the price of FPH was already P So if you bought shares of FPH, you could have made P1, The amount of money you can gain or lose in the stock market is always a percentage of the amount of money you put in. How high or low this percentage is dependent on how willing you are to learn and how disciplined you are in applying what you learn.

I personally think that this is just average given that was a very good year. He doubled his money in just a year! However, if we were in the year , during the time of the financial crisis, the average return was negative! So if an investor made a profit, his performance was already considered above average. This PSEi graph is useful because it is often used as a benchmark on how the market performed.

As you can see, the PSEi was going down the whole year of The stock market is very risky. One of the principles of forecasting a process of making intelligent predictions , is that the more specific a prediction is, the more likely it is to be wrong.

The opposite is also true in the sense that the more general predictions are more likely to be correct. This is why investing in the short term is seen as more risky than investing for the long term. The stock market is inherently risky because you can never predict the exact value of your investment. The good thing is that this amount of risk is acceptable if you acknowledge the fact that you could be wrong. With diversification and other investing strategies, this type of risk can be easily managed.

On the contrary, the inherent risk becomes a huge problem when the investor assumes that his prediction is going to be right. If he assumes that there is no chance of error, the investor will most likely have prepared no plans in the event that he is wrong.

This is the much more dangerous type of risk we must be aware of, the risk due to ignorance. Risk Due to Ignorance The risk due to ignorance is perfectly expressed in one of my favorite but highly underrated quotes on investing. There are only good investments, and bad investments. When I read the quote above, I got really confused. If Robert Kiyosaki was right, it meant that it was possible to get higher returns, without having to take on higher risks.

All you needed to do was to become a smarter investor. This was puzzling, but at the same time empowering. From this there has developed the general notion that the rate of return which the investor should aim for is more or less proportionate to the degree of risk he is ready to run. Our view is different. The rate of return sought should be dependent, rather on the amount of intelligent effort the investor is willing and able to bring to bear on his task.

The minimum return goes to our passive investor, who wants both safety and freedom from concern. The maximum return would be realized by the alert and enterprising investor who exercises maximum intelligence and skill. Rather, it depended on disciplined study. This is because you can never exactly predict what the value of your investment will be in the coming years. The Biggest Problem in Investing The biggest problem that can arise with investing is when your personal situation forces you to suddenly sell your investments for cash when the market is down.

Mark invested all his savings — amounting to P, — in the stock market. Unfortunately, he got into an accident where the bones in his leg got crushed. The medical fees were P, And even though his company offered medical benefits, his employer would only pay for P20, So Mark had to find a way to pay for his share of P80, The only other place he had money was in the stock market.

Unluckily, at that time, the market was down and the value of his investment was just P80, The value would go down and then it would go up again. It would go down and then it would go up again. Normally, he would just wait it out. But this time was different. He had to pay the hospital.

So, he withdrew his investment worth P80, , taking a loss of P20, This is one of the most discouraging things that can happen when you put all your money in the stock market. In order to prevent the problem above, there are three ways to protect your investments from a sudden need of cash. I recommend that you do all of them, before you invest in the stock market.

Protect yourself with insurance. This is to make sure that when an accident happens to you, your loved ones, your car, home, or business it will be the insurance company that will be obligated to pay for it. Shield yourself with an emergency fund. An emergency fund is a sum of money set aside just for emergencies. The general minimum of this amount is 6 months of your living expenses.

So if you suddenly need money because you lost your job, you can live off your emergency fund until you find a new one. There are people who spend in total 1 hour per year. While there are those who go at it 8 hours per day! When I was starting out, I took a look at my portfolio every hour! It was very exciting to see my money move up, and terrifying to see it move down. That habit lasted for about two weeks, and then I got used to it.

Checking it frequently just became boring and well, a waste of time. Now, I just spend 30 minutes every Saturday and Sunday to read up on the stocks I have. And once a month I spend a little more time to place my buy orders in the stock market. I now spend more time studying the stocks, rather than just staring at my portfolio and illogically cheering it on. Instead, the money you can make is proportional to the quality of investment knowledge you have learned and applied.

They asked about their cars, suits, shoes, vacations, houses, worries, and more. Of course they also asked them about how long they kept their investments in a particular company.

A great majority of them hold their stocks for a minimum of one year. Thus, they can focus their time and energy to master their understanding of a much smaller variety of offerings in the market. Stanley Ph. Danko Ph. With the widespread use of the internet, you can start investing for as low as P5, The primary limitation before was that you needed a personal stock broker in order to be able to invest.

So the stock brokers who had limited time had to set a minimum amount of investment before they accepted individual investors. But today, there are online stock brokers who allow you to invest in the stock market on your own. All you need is a computer and a stable internet connection. You can send your buy or sell orders online. Here are the websites of some online brokers. Take note that this list is not complete. I am not paid to promote them. I just highly recommend them, being a satisfied customer myself.

They are the largest online brokerage in the country. They are also the most active when it comes to promoting stock market education. They even hold introductory stock market seminars every week at their office. Stress and risk are highly related to each other. Stress comes from the feeling of being out of control, of not knowing what to do next.

And not knowing what to do next is simply a cause of lack of information caused by the lack of research. Imagine two college students taking a Calculus exam. Student A studied several weeks before the exam. Student B just started studying the night before. Who do you think would be more stressed before, during and after the exam? Rick just heard the news that his officemate, Steve just made P30, in one day from the stock market.

He asked a friend for more information and to let him in on the next big thing on the stock market. A week later his friend tells Rick to invest in XYZ Company so that could double his money in a week. Rick gets excited over the news, and on the same day, invests his P, savings into XYZ.

The next day, Rick looks at his account… his money is just P90, He demands an explanation from his friend. Rick being a very trusting guy follows the advice… One week later, he opens his account…. And boom. Account Balance: P10, Imagine the stress Rick was going through. He blamed his friend for losing his money, and swore that he would never invest in the stock market again. Rick was unprepared and took on a lot of risk due to ignorance.

I also counted the number of steps and clicks you had to make for the basic transactions. I also made a distinction whether the stock market term is really useful. Count the number of buttons available in your TV remote, and then count how many of those buttons you actually use. What you see when you open the order window. There are three ways to get your money into the stock market. The key here is to find which best fits your desired style of investing.

These funds are professionally handled by the fund manager. In a mutual fund, you are not buying specific company. Instead, what you are buying are shares of that specific fund. So if the fund is invested in 10 different companies, your money is also invested in those 10 different companies. This also means that you no longer have to decide which companies to buy, and when to sell them. That responsibility is delegated to the fund manager. The good thing about this is that you can get advice made specific to your investing needs: Your investment goals, your timeline, and your tolerance to risk.

A good stock broker will be able to advice you on what to buy, when to sell, and notify you of the upcoming opportunities.

You can even assign some brokers to manage your portfolio for you while you go on vacation. The many personalized services that come with this method entail a price — commonly in the form of higher commission rates and higher minimums for starting an account.

On your own, you will be able to buy and sell stocks as long as you have a computer with access to the internet. Since everything is do-it-yourself, you will be paying the lowest commission rate possible 0. For the market tips and advice, your online broker will be providing you with tons of reports and market information. It would be up to you how to understand it and how to get the relevant details. Among these three options, what I generally recommend to starting investors is to start with an online stock broker.

This makes it accessible to almost anyone who has a source of steady source of income. You will read the company reports. You will decide which companies to buy, and which companies to sell. You will execute your buy and sell orders. You will manage your own portfolio. This means you stand to earn the biggest amount. This is also the reason why I would recommend doing it on your own first, before getting a mutual fund.

In a mutual fund, everything is managed for you. Your only responsibility is to write a check or make a deposit to the mutual fund company. Developing the skill of writing a check and paying someone is very dangerous! In fact, I also have investments in mutual funds. The lowest that is allowable by the PSE is 0.

These other fees however would not vary from broker to broker. This is why with online brokers where only generic market information is provided , they just charge the minimum. Here is a complete list of online and traditional brokers registered with the PSE. Broker Directory. A ranking report by volume of transactions is also available in that link.

Overall, you should pick a broker who matches your investing needs. As a beginning investor with little starting capital, it would be best to pick brokers with the lowest fees.

This way, more of your available money is put into stocks rather than transaction fees. Take the Leap - Quick Tip! They have the lowest fees. And they provide a lot of market information. And they are the largest online brokerage in the country stability. Some are simple, and some are a little complicated. Take a look at which one would be best for you.

If it gets bigger, great! But if it gets lost, then you should still be okay. Pick the companies that will most probably outlive you. These are the companies that have a history of expanding into new ways of making money. Then they expanded their business to also provide internet and cellular services. And much more recently, they even acquired a competitor, Sun Cellular. Then the business shifted to selling hotdogs. After the hotdogs, came the Yumburgers and Chickenjoy. This marked their entrance in the pizza-pasta business.

But aside from this product, SMC has had a history of expanding into new businesses. Clearly, San Miguel Corporation will keep on evolving to thrive in the ever changing market. SMC P In fact, if it was the year — and you had put your money in San Miguel Corporation, your returns would have been negative in However, it requires more discipline than the buy and hold strategy.

The peso cost averaging strategy is investing a fixed amount of money in a good company at fixed intervals, regardless of its price. This way, you spread out the risk of buying at expensive prices, at the same time take advantage of the opportunities at cheap prices.

Here is an example to show you how this works. The following table shows the prices of Ayala Land Inc, at six-month intervals. Average Purchase Price of Shares Purchase Price of Shares Notice that even if the prices have gone up in January , the average purchase price still remains lower.

This is because a lot more shares were purchased during Jul to Jan What does lot size mean? As a result, the average purchase price also goes lower. This is the magic of peso-cost averaging. By buying at fixed intervals, with fixed amounts of money, you take advantage of the price fluctuations.

Market Timing Market timing is also known as stock trading. This means actively watching the stock market for opportunities to buy at the lows, and sell at the highs. Market timing requires more skill, time and dedication. At the same time, it is also a lot more exciting. With timing the market, you can double your money in a week! But at the same time, the reverse could happen.

This rush of winning and losing is the reason why the stock market is often likened to gambling. While the concept of timing the lows and selling at the highs seems simple, it requires knowledge of a science called technical analysis. Technical analysis is a technique where you look for patterns in the stock charts, and look for different market indicators. Just to show a preview of some things you should know if you plan on doing this, take a look at this chart.

Of these three strategies, the best strategy for the new investor is peso cost averaging. You spread your risk. You only need to check on it, once or twice a month. If you already have a huge amount of money set-aside say, P, and above , divide that portion into 6 portions or so and slowly invest it into the stock market using the peso-cost averaging.

Professionals use two approaches in deciding which companies to buy: Fundamental analysis and Technical analysis. Before I explain these two methods, please be reminded that the people who do it are professionals. Meaning they spend majority of their work week performing these kinds of analyses. Now, rest assured though that you do not need to learn how to do this. The approach is usually done in a top-down manner, from general to specific. The following list is the series of questions one would need to answer using the fundamental analysis approach on a global level.

North America? When I was still starting out in studying how to invest in the stock market, this was one of the first things that I read. And it overwhelmed me. I felt that I had to read my book on Econ again!

Fundamental Analysis: Simpler Version To make fundamental analysis easier, the best first step is to start with what you already know. Start by identifying the products that you already use and find out who makes them. Which fast food restaurants do you eat in? Do you use electricity? Of course you do - Find out more about Meralco. Who provides your water? Where do you shop?

SM Malls or Ayala Malls? Either way, both are listed in the stock market. Which airlines do you use for travel? Where do you work? Who provides your internet? What about your sim card? For each of these companies, your goal is to find evidence that these companies will continue to grow in the future.

The more evidence you have, the better your chance of making a good choice. Which can convince you to buy a stock? Which are good enough reasons for you to buy a stock? Come , all these units would be sold out.

My boss just invested P10m into company XYZ! My boss, whose wife is a mutual fund manager of an international bank, just invested P10m into company XYZ! Some evidence will be based on 10 years of performance, while some will be based on the latest rumors.

The major assumption in technical analysis is that everything that has happened and is happening is already factored into the stock price. And therefore, by studying the stock price alone, you have already factored in everything that could affect the price including fundamental factors and the market psychology.

In short, you only consider the price of the stock with technical analysis. This is in contrast with fundamental analysis where everything seems like a factor to consider. This makes technical analysis look a lot simpler, making more people want to try it out. In fact, the seminars on this offered by CitisecOnline have two sessions, each one going for at least 4 hours.

I have decided to end the discussion on technical analysis here. The reason is that I do not want to encourage you to try it without more in-depth training. At this point, it is enough that you know that Technical Analysis exists. Yes, there is a better, easier, safer and more effective way to do it! How to create a secure financial future for you and your family. And much more. Even if you know nothing about the stock market, even if you are a beginner, this book will get you started investing and trading the right way.

Are you ready to start creating real wealth in the stock market? It takes you step by Even if you have never traded before, this book will have you ready to take action and create real wealth by investing in the Stock Market.

This book explains in clear and understandable language how anyone can benefit from learning about trading and investing in the stock market. All of the necessary basics are set forth, including the differences between trading and investing. A veteran trader, Andrew Aziz, shares some of his own proven day trading strategies and discusses key "to dos" and "not to dos" every new day trader must know before putting their hard-earned money at risk.

Two chapters of the book are dedicated to the art and science of swing trading. Effective swing trading strategies are outlined, and all are amply illustrated with examples from real trades. The final section of the book is devoted to investing in the market. You will learn not only how to read a company's financial statements and select winning stocks, but also how to construct a well-balanced investment portfolio. Given that the author and his guest contributor have quite different backgrounds in finance, a unique opportunity is created for the reader to capture a very broad picture of the true potential of trading and investing in the stock market.

In summary, you will learn the following key concepts by reading this book: What are stocks? What are exchanges, indices and ETFs.

How to pick the right brokerage account. How to read price action and candle stick charts. This should be the first book read by a beginning investor.

Morgan Analyst "This book is written in language fit for any aspiring investor! How I learned to Invest When I started investing in the stock market, at 16 years old, it was overwhelming. There were many technical terms that I did not understand. I did not know how to find a good stock or even when to buy a stock. It was even more overwhelming that there were so many investing strategies- short selling, day trading, long-term investing; I did not know which one was the best for me.

Even worse was that I did not know how to get started without the fear of losing my money. For many days, months and years, I studied the strategies that successful investors like Warren Buffet have used to become the best.