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Friday, June 01, 2012

A Penny for Your Thoughts

I had my passbook updated 2 weeks ago and noticed that the interest on my money has been again reduced to a mere 1/3 of a percent.A few years ago, interest on deposits was at least 1% but the recent economic and finance sectors' condition brought down the rates now to this very discouraging fraction. I mean, why would I retain my money in the bank with this very low interest rate, not to mention whatever my money will earn will be subjected to withholding tax?

I worked in a bank for over 3 years writing policies and procedures but until now, I still could not understand why they have to penalize depositors for failing to meet the required maintaining balance, or deduct a fee every month (until you ran out of funds and the account eventually close out) for non-movement (dormant accounts). Whether or not there is movement, the money stays in the bank and bank uses the money for other investments. So why?

I guess this is why in the last couple of years, I have learned to put our hour hard-earned cash in more profitable investments like stock market and mutual fund. There are risks involved but the chance of growing funds is relatively higher compared to letting it sleep in the bank. For example, in stock market, if you play it right and not get greedy, the money could flow in in as short as one day. In case of loss, I'd like to take it as only a paper loss unless I formally sell our stocks at a price lower than our purchase cost.

There is a misconception that stock market trading is not only for those with lots of funds to spare. Not really. It's for everyone who are financially wise and are willing to take reasonable risks. I'd say for beginners, it's good to start with a few thousands. You don't even have to buy blue chips and instead start with a top penny stock and could bring good results as well as small doesn't always mean that the potential is also minimal.

So how do a neophyte in stock trading begin? I suggest attending a free seminar being offered by stock trading corporations. They usually schedule trainings and orientations on a regular basis and they are also free. It's also good to start reading or watching the news, and NOT the entertainment and showbiz section. Start browsing their business section and arm yourself with information particularly on the industry/stocks you are eyeing to purchase. This will help you in making your decision whether to buy or sell.

If one is really intent on making a living on stock trading, maybe it's better to get the help of a seasoned stocks broker. They know the ins and outs of the business and can offer sound advice when everything seems to be falling apart. Of course, there is a fee involved in a form of a commission.


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