4 Reasons Why You’re Not Investing
Published: July 2, 2015 | Updated: December 12, 2019 | Posted by: Carlo Miguel Castañeda | Personal Finance
Investing is a hot topic right now. Every personal finance expert has investing as part of their recommendations for financial health and achieving financial freedom. When you turn on the news or read the papers, everyone’s going on about the stock market and how well it’s doing, and experts are saying that you should start investing now to take advantage.
But even after all that, not a lot of people have taken the plunge. According to a 2013 survey by the Philippine Stock Exchange, there were only 585,562 trading accounts in the whole country that year, or a mere 0.6% of the total Philippine population.
So why aren’t you investing?
Going by probability, you’re likely not one of those 0.6% who has a trading account. There are four main reasons that you might have for not investing:
- You can’t afford it. To build a balanced portfolio, you’ll need to buy a lot of different stocks in different industries. To do that, you’ll need to invest hundreds of thousands of pesos, at the very least. Not everybody has that kind of money.Plus, if you’re looking at stocks, there are a lot of costs involved, like commission fees payable to your trader, VAT on that commission, Philippine Stock Exchange transaction fee, and others. Selling stocks is even more expensive as you’ll have to pay sales tax. If you’re only going to buy a few thousand pesos’ worth of stocks and sell after a few months, all the fees are going to eat into whatever profit you may have.
- You don’t know enough about the stock market. Never put money in a business you don’t understand. The same goes for the stock market and investing. You may not know the difference between dividends and derivatives, or why Company A is a better buy than Company X, so you don’t put your hard-earned money in the stock market where anything could happen to it. It’s a recipe for disaster.
- You don’t like risking your money. We all know someone who bought into a lucrative “investment” promising 200% yields in one year, and lost all their money doing so. Just think about the Aman Futures scam, which stole Php12 billion. Or Emgoldex now. All these scams may make you wary about other investment products, even if they are actually legitimate.Even if you know that investing in the stock market isn’t a scam, you may still be put off by the risks you’re taking with your money. Unlike putting your money in the bank which insures your deposits up to Php 500,000, you get no such reassurance in the stock market. The value of your investment may plummet if the economy goes south. There’s a lot of risk involved, and your tolerance might be too low. So you’d rather just put your money in a low-yield savings account, because at least it’s safe there.
- You don’t have the time to get good at it. Who has the time to sit around watching stock prices like a hawk, waiting for the perfect time to sell, when you have a job to do and responsibilities to fulfill? To make truly informed investment decisions, you’ll need to pore over a lot of corporate and economic data, and to time your transactions. And when you’ve got a 9 – 5 job to worry about, doing your due diligence is almost impossible.
But these reasons shouldn’t be enough to stop you from investing.
Sure, all of the four items above are reasonable concerns to have. But they shouldn’t prevent you from investing! To help you out, we’ll go through these reasons one by one over the next few weeks to show you that yes, it is possible to invest even if you don’t have huge amounts of money, time, or knowledge.
The bottom line is: anybody can invest. It is by far the best way for you to earn. Stay tuned to this space on MoneyMax to defeat the four major reasons people don’t invest, and so you can start your journey towards financial freedom.