The myth
You might have heard stories of millionaires or even billionaires who started building wealth by investing in stocks. Becoming wealthy is a dream shared by many, and so people may attempt to replicate this kind of success.
Such stories tend to leave the impression that anyone can turn small amounts of money into substantial riches by getting into the stock market.
The reality
Investing in stocks – or any asset, for that matter – isn’t a guaranteed path to riches. However, with proper preparation and the right mindset, it can help you build wealth and achieve your financial goals over time.
Here are some things to remember:
- Risk is always present in investing
You can only invest if you can accept a certain degree of risk. Stocks are particularly volatile, which means prices can go up and down quickly and by a lot.
Quick and substantial returns are possible if you buy and sell the right stock at the right time. For example, investing in emerging industries or popular sectors like technology or consumer goods during their growth periods might be profitable.
However, this strategy carries risk, as predicting stock movements is challenging. If you panic and sell your stocks when prices fall, you might lose money.
That’s why these assets are best suited for Aggressive investors who can withstand high levels of risk.
- You need a stable financial foundation
Given the risks, it’s important to be in good financial health before you begin investing. This means having sufficient emergency savings, paying down debt, and properly budgeting.
Investing before you're financially ready can leave you unprepared for financial troubles. Imagine having to withdraw your investments prematurely to cover sudden expenses, like a family member's hospital bill or an urgent repair for your car.
Such events may force you to sell your investments at a loss.
- Patience is key
It can take a lot of time and effort to study and identify companies that may bring you the growth you want. Even if you make good choices, it can still take years or decades to get your desired returns, especially if you’re aiming for high profits.
Think of it like planting a mango tree— it can take years for it to bear fruit, but once it does, you may reap the benefits for many seasons.
If you’ll invest consistently over the long term, you’ll basically practice peso-cost averaging which can help you reduce risks. This approach can improve your chances of reaching your financial goals.
By being patient and allowing things to take time, you can also avoid making rash decisions that could negatively impact your finances.
Patience allows you to weather the market's ups and downs, much like how farmers patiently wait for the right season to harvest their crops for the best yield.
Verdict: It depends.
Many people have built wealth by investing in stocks, but success isn’t guaranteed. It takes time, patience, and constant learning to develop a strong portfolio that can get you to your goals.
You may find that it’s more satisfying to put in the work and develop a deeper understanding of investing than it is to blindly chase overnight success.
_large.jpg)
