Monday, December 5, 2011

What you have learnt from Stock Market?

One of my friend told me, he dare not invest in stock market, because he feel that market is unstable at the moment. Some day up and follow by few days down, he was unable to sleep well when he involved in Stock Market last time.

Why we invest in stock market? If a company's stock selling at one dollar today, tomorrow and one year later, what's the fun to invest in stock market? We know one thing, inflation always happen, today's asset worth 1 million, it can become 1.2 million one year latter. Yes, we want Capital Gain! This is true only for investment grade stocks! We need market up and down to make money.

The second thing I like to invest in stock market is because of liquidity. You can sell the stock you buy and take the cash within 3 working days. Hence, you need to select the right stock to invest, avoid those stock with low liquidity, unless you are very rich and willing to wait for years.

Stocks do pay dividend, if you know how to “save” high dividend stocks. We particularly like the stocks which pay dividend with the increase dividend rate every year. Many still don't know they can sleep well if choose this kind of stocks.

Try to make money when you buy. Buy on the day when market crash! Cheap sales are every where. Find the value stock, buy the value of 1 dollar with 50 cents, then you know at the time of buying, you had earn 50%.

There's no secret of creating wealth in stock market. All you need to do is find the investment grade stock, buy when market go down. Make sure the stock pay dividend of more than bank's FD rate. Invest in Stock market is high risk only in the case of you do not know what you are doing!

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