A lot of people are worried today because of whats happening with our stock market.  These worried people are those who have invested when the market was high.  But I want to give reassurance that PSEI will go up.  If you look at the past 9 years the effective compounding growth rate grows every year.  If you look at the psei since Dec 2002 until now it is growing 1.

Investing in the stock market has grown more than double.  Do n’t be frightened by the volatility because it is included in the experience of investing.   Just keep it there because chances are you can double your money in 5 years or if not, wait for a little while it will double. That is one of the legitimate way of gaining your money.  In fact the pockets of volatility are what the wise investors are waiting for in the market.

Today, it might be down but wait for the moment that it will go up. Last Friday, it was 8200 coming from 9000.   But when you look back the market it is always rising.

Does economic growth support expansion.  One thing is for sure is force for growth with the TRAIN law and infrastructure spending with all the plans of this administration. The question is kapag tumaas ba GDP tataas din ba  yung pera natin sa stock market? Ang sagot jan Yes, GDP is composed of 4 things, consumption, investment, government spending,net fix form.

GDP is a broad measurement of a nation’s overall economic activity – the godfather of the indicator world. (investopedia)  As of the moment the Philippines GDP is at 6-7% (rappler). You have heard the news that we are the top 3 best countries to be invested in the world. The GDP or gross domestic product of a country provides a measure of the monetary value of the goods and services that country produces in a specific year.  This is an important statistic that indicates whether an economy is growing or contracting.  How do we measure the GDP? This can be calculated using an income approach or a spending approach and by adjusting for inflation. However, GDP as a measure also has its drawbacks.2

We are the second best growing country in the world in terms of GDP from China and India.  Why is this very important. When you invest in the market, you invest in the market that has a growth. If the market is growing you can buy low and sell high.  This is the basic principle.  When the GDP is good. what we are seeing it supports the generation of companies in the stock market on the earnings per share.  What unique in the GDP in the Philippines comes from the consumption.  In with what happen with train law being executed what happens here is adding money to the pockets of the Filipino people specially the middle and upper class.  it easily created money for this people to be used in spending depending on the level of pay.

Now, what do we do with our extra money?  Here are our suggestions to you. There are a lot of instruments that you can put your money into.  You can put it in the VUL policy which will give you insurance and investments or you can plainly put it into mutual funds.  The choice is yours! But what we need you to do is to make sure that your money is growing while you are sleeping because we do not want you to get left behind when the tides of our economy goes high soon.

What happened?

Jobs report in the US turned out very good.

More consumption is expected, thus, inflation is expected to go up.

The interest rate is anticipated to be raised because of inflation.

Raised Interest Rate is Negative for equities.

Investors sell equities.

 

Sources:

  1. http://bit.ly/2DFGcJW
  2. investopedia

 

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