Investing in the stock market is one of the best way to grow your hard-earned money given that you carry the right discipline and follow the right strategy aligned with your investment goals. Investing long-term using peso cost averaging method is one proven way to make money when investing in the stock market especially for beginners.
Despite this expert’s advise, many people especially Filipino still lose their hard-earned money because of failed and wrong expectations when investing in the stock market. I know many people can relate.
On this article, I will share some of the “expectations vs reality” when investing in the stock market. If you’re a beginner, I hope you can find valuable lesson on this.
Expectations vs Reality when investing in the stock market
1. Expectation: Other people make money investing in the stock market, I’m sure I can make money too.
Reality / Truth: Investing in the stock market is not for everyone. While other people can and are making money, it is not a guarantee that you are also going to make money. Stock market is volatile and high risk type of investment.
If you cannot take the risk, better not to invest in stock market and look for other low-medium investment instruments. Different people have different risk appetite, different financial goals, financial knowledge and experiences that push them making different investment decisions.
Do not invest on the things you don’t understand should always be the rule of thumb.
2. Expectation: The stock market is always going up.
Reality / Truth: As mentioned above and as advised by the financial experts, stock market is one of the most volatile investment out there. There are many internal and external factors that can affect the stock market performance.
Thus, stock market always going up or green is just a fantasy or dream of everyone. No one can really predict what is exactly going to happen. Even the the best “technical chartist” lose money, so wake up!
3. Expectation: I am a long-term investor and I will invest in xxx years to come.
Reality / Truth: Are you sure? 😀 Then why you can’t sleep at night and not in mood when your portfolio is red? Or the stock market is down? Given that you just started or bought that stock couple of weeks or months ago. This is the sad reality.
Many investors lose their money because they are “long-term” only when they see their portfolio green or up. When the stock market is down or their portfolio is red, they are nervous, can’t think clear and being pressured. Situation like this pushed many “long-term investors” to sell their stocks thinking they will lose all their money. Of course they did, because they sell. Only to realize it will come back up 2x of the previous price.
If you’re a long-term investor, do it. Invest long term! Stick to your goals. It really needs patience and discipline to gain future rewards.
4. Expectation: All of my friends and people in facebook are buying/selling that stock, I’ll buy/sell that too.
Reality / Truth: Another harsh reality about investing in the stock market is hyping and/or bashing are everywhere!
Since exchange or sharing of information can be done a lot of ways in a speed of light today, many tend to based their investing decisions from their facebook’s friend status, post or tweet without really understanding and knowing the fact and source of information.
Check online and you’ll see that this is really happening now. Another rule of thumb is to always do your due diligence before making investment decisions. Your decisions should always be based on your own objective and goals and not from someone’s facebook status. I’ll repeat, do not invest on the things you don’t understand!
5. Expectation: Stock market will make me rich in just a short period of time.
Reality / Truth: Sorry, but it’s not. As mentioned, investing in the stock market comes with high risks. It is very volatile. Expecting to make lots of money ASAP or worst to get rich in just a short period of time is just a fantasy.
Time is your alley when investing in the stock market. Take time. Start small, be consistent and let it grow. Set and stick to your financial goals. Investing long-term is still the safest and best way to grow your money especially for fellow beginners.
I’ll repeat again, it needs a lot of patience and discipline!
Investing in the stock market is good and another great option to grow your hard-earned money. As history shows, it can provide you the highest possible returns compared to other paper asset investment. But as this article suggests, make sure you know your “expectations vs reality” before you start. Create a plan and set smart financial goals and work on them.
Take time, start small and be consistent. Always remember that investing in yourself is the best investment of all!
To our success, cheers!
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