Should You Invest in the Stock Market?

So you also want to invest in the stock market because a friend or co-worker is investing?

​Have you considered investing in the stock market but are not sure if stock investing is for you? With the help of these few questions, you can determine if investing in the stock market is right for you or what other investment options apply to you. Just make sure your answers are correct. You total the score you get.​​

Here's the scoring:

a = 1 point
b = 2 points
c = 3 points
d = 4 points

How long do you plan to invest in the stock market?

​a. 1 year or less?
b. 1 to 5 years?
c. 5 to 10 years?
d. 10 years or more?

What is your financial goal? What is your reason why you want to invest in the stock market?

a. To protect your capital?
b. To earn regular income?
c. To earn income and grow capital at same time?
d. To grow capital for the long-term?

When will you need the income or your money invested?

a. In less than a year?
b. For the next 3 years?
c. For the next 10 years?
d. Or for 10 years or more?

In terms of percentage, how much money can you invest over the long-term?

​a. 10% to 20%?
b. 40% to 60%?
c. 70 to 80%?
​d. 90% to 100%?

Here's the thing, if the stock market went down, let's say 15% to 20% in a year, what will you do?

​a. Will you panic and sell all of your investments?
b. Will you sell all and go for safer outlets?
c. Will you sell 50% of your stock portfolio?
d. Or you will think that it's a great opportunity to buy more stocks?

So what are the total scores you got?

1 to 5 points = You are a conservative investor
6 to 10 points = You are a moderately conservative investor
11 to 15 points = You are a moderately aggressive investor
16 to 20 points = You are a aggressive investor

​Type of Investor's Profile

Conservative
​

• Capital protection.
• Peace of mind is main priority.
• Forego higher returns for low risk options.

Recommended Investment Options

Deposits: Time Deposits and Savings Accounts

Moderately Conservative
​

• Expect regular income.
• Gradual approach to reaching investment goals.
• Balance risk and reward.

Recommended Investment Options

Funds and Bonds: Treasury Bills, Treasury Bonds, Fixed Rate Treasury Notes, ROPs and Philippine Corporate Bonds, Mutual Funds, UITF

Moderately Aggressive
​

• Uncertainty of returns is moderately acceptable.
• Balance between gradual approach to achieve goals and capital growth.

Recommended Investment Options

Funds and Equities: Mutual Funds, UITF, Stocks, Exchange-Traded Funds, and REITs

Aggressive
​

• Capital appreciation and can tolerate short-term fluctuations.
• See bad news as opportunities for bigger gains.

​Recommended Investment Options

Funds and Equities: Mutual Funds, UITF, Stocks, Exchange-Traded Funds, and REITs

Higher risk is associated with greater probability of higher return 
and lower risk with a greater probability of smaller return.

Why is an investment horizon important?

​The length of an investment horizon will determine what types of investment products are most suitable for the investor's goals.