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Wednesday, January 18, 2012

Trader Vs Investor


Trader Vs Investor

Trader Vs Investor in the Philippines Stock Market
By the help of internet, many people now can make a blog and post an article about personal finances or share their personal knowledge and experiences using social networking site like Facebook, twitter etc. From those site we can get free information that teach us particularly on how to properly handle, manage personal finances and sometimes how to grow more our money  by placing in different investment vehicle. Some people are can easily follow those tips that they learned from those website or blog like spend less, earn more. And some are not.

Like me as an example. I learned to handle and manage my finances not from the school or within my family but from those personal finances blog that I’m always reading. After saving of money become my habit. Its flow naturally in me the idea that it is not enough to save only but I need to do something in order to grow more my savings thus I look for an investment that can help to grow my savings.

Some advices I’ve got are to place in mutual funds, unit investment trust fund (UTIF), time deposit and Philippines stock market. An aggressive advice is if you’re risk taker then place your money in the Philippines stock market and buy shares of stock of a good company since investing in Philippines stock market can give a higher return compare to other investment vehicle.

This is exactly what I’m doing now. I place my money in the Philippines stock market. One time, my brother told me that placing my money in the stock market is very risky and there’s a higher possibility that I might loss my money in there. He said, did you know that most people participate in buying or selling of stocks totally loss their money and never can recover? Why are you bringing your money there?
Yes, you’re correct. 

I said to my brother, participating in stock market is very risky if you didn’t know what you’re doing. Very risky if you don’t have goal and purpose why are you participating in the stock market. Of course, before I place my money in stock market. The first thing I work on is gain knowledge anything about on how to participate in the Philippines stock market. And that is why internet has a big rule on my personal finances. 

Also I explained to him that there are two kind of people (I believe and from Truly Rich Club point of view were I’m a member) participating in the stock market. First is Trader and second is Investor. Those two participants are common in nature but different in characteristic. Both are buying and selling shares of stock but the difference are the time they holding the stock and the time they spend in buying and selling of stocks.

Traders buy and sell share of stocks often on shortest time while investor’s buy shares of stocks but sell seldom and has a long term plan in holding their shares of stock before selling. Traders mostly place their money in lump sum in particular stocks while investor’s do also lump sum but I think most of them place their money in interval like monthly, quarterly basis or they do peso cost averaging strategy. In Truly Rich Club they use called Strategic Average Method (SAM). 

Traders must closely watch, monitor and need more time to research and analyses the price ups and down in the stock market or in short they time the market when to buy and sell the shares of stock. Investor’s since planning to hold the stocks in long term, all they have to do is patiently buying the stocks of a good company  not bothering the ups and down of the price in the stock market.

Then who among the two participant has a highest risk to loss their money? I think the traders because their money actively flowing in and out the market. It needs more time to research and monitor the market. Wrong decision can lead and result of losing their money.

If you’re asking me who am I in the Philippines stock market. I have less time to watch and monitor the price in the stock market due to the nature of my work. I can’t buy and sell shares of stock often. I have small amount of money to buy stocks so what I always doing is buying every month to accumulate more stocks of a good company and sell later on. My plan is long term so I will sell my accumulated stocks perhaps after 5 to 10 years from now. In my situation I can say I am an investor in the stock market.

I believe becoming an investor and not as a trader can help me to achieve my goal and to become financially free. And one thing that I have to do and hoping that can lead to achieve my goal is by learning more about in personal finances and by investing in the stock market as investor. 

Through the help of internet, reading many personal finances blog out there and also by joining Truly Rich Club as for my guide it is a good start in my part to help me gaining more knowledge about investing in stock market. It is not impossible to become financially free though it’s not easy but it is clearly achievable. We can't deny that it is already done and achieve by other people so for me I can do it also.

How about you? Are you a trader or an investor in the stock market?



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