The Philippine stock market had a roller-coaster ride in 2018, it began with a bang hitting a record high of 9,078 points at the end of January last year. However, it failed to sustained the momentum and swing to low levels reaching a bearish territory at a year-low of 6,843 on November 13th. But local stocks managed to moved upward as the year approached to an end and continued to rise. The Philippine stock market is having a better year so far and PSE index is seen to hit 8,300 points this year. With this optimistic outlook can encourage more Filipinos to participate in the stock market? The number of Filipinos trading and investing in stock market are keep rising but still below 1% of the total Philippine population, a very small percentage compared to other nations in Asia. Why Filipinos shy away from investing in the stock market? Here are 3 reasons in my mind that may be the causes that holding them back from investing in stock markets.
1. Lack of Knowledge
I have heard about how someone turned thousands into millions overnight and some rags to riches traders stories which always amazes me. I asked my self if those are for real? Some people think that the stock market is a gambling and the trading floor is the hub of gamblers. This wrong perception emerge due to public lack of awareness about stock market. Although school did teach the basics of investing, but stock market investing in specific was never been taught in most schools or even at home. I do hope that PSE and brokerage firms will continue their financial literacy programs to reach a wider audience making stock investing understandable and accessible.
2. Fear of Losing
One of the biggest fears Filipinos hold to is the fear of losing money. These fears can come from personal, friends or family experience. When you invest in stocks, there is a chance that its value may decrease and most people will be way too afraid to make such an investments. There is no guarantee of a good returns in stock markets, even blue chips stocks drop its value due to supply and demand and other unforeseen events affecting the markets. Stock market investing is a high risk, but keeping your money in piggy bank is riskier because the money declining in value overtime due to inflation.
3. Preference towards tangible assets
Owning real estate such as house is one of the famous financial commitment for Filipinos. We love to acquire assets that we can see, feel and utilize. Like many Asian countries, the Philippines has a very strong family relations and having a decent comfortable house that can provide higher quality of life for the family definitely come as top priority. In addition, analyzing a company’s income statement, balance sheet and cash flow is much more difficult than just buying a house and watch the capital appreciate in value.
It is a fact that most people not only Filipinos are shunning stock market trade. The perception from general public in relation to this kind of investment is still a rich guy’s game. In my opinion, for those who want to create good wealth must overcome those fears, learn the necessary skills and start chasing the promising returns of stock market. (These are just my ideas, your opinion is highly valued. Just leave a comment below)