Most people think that the world’s most successful investors made their fortunes by possessing a certain "X-Factor" that allows them to time the market, anticipate trends, and divest their shares right in the nick of time. This misconception is far from the truth.
In a recently held financial literacy forum, a highly respected stock investment expert alongside Philam Life and Philam Asset Management, Inc. (PAMI) executives, systematically debunked some of the most popular financial and investment myths. Myths that have either held people back from investing, or worse, led them to ruin.
"Understandably, many people believe that when the stock market goes down, that’s when emotions kick in—either they panic and sell because of fear or they hold on to a bad stock with the false hope that it will go back up again," noted Registered Financial Planner Marvin Germo.
"It normally shocks people when I tell them that if they are financially liquid they should do the opposite and look for quality stocks that are cheaper," Mr. Germo said. "Just imagine if it were gasoline and price drops to P10 a liter, wouldn’t you fill up your tank?"
He further noted how investments pay off in the long term. "Instead of panicking when stock prices go down, your best bet is to follow your plan, continue with your strategy, and select stocks that have great value with the potential to move even higher. The bottom line is that all stocks go down, but the good ones bounce back after falling. Prices will recover over time," he emphasized
PAMI President and CEO Ferdinand Berba concurred with this point, and pointed out the importance of patience.
"I wish I could tell you that investing will make you rich overnight, but keep in mind that what’s easily gained is easily lost," he explained. "The main strength of investing in the market is to build wealth over time," he added.
"One of our products, the PAMI Equity Index Fund, takes advantage of a long-term investment because it allows investors to hitch on to the growth of the Philippine Stock Exchange Index (PSEi)," Berba indicated. "Within the past five years, the PSEi performance levels has almost doubled, which gave investors high returns. While it was over a course of five years, profit was significantly higher as compared with traditional savings," he explained.
"Indeed, it’s time in the market and not timing the market, that’s important," Berba further underscored.
The notion that an investor can be successful in the stock market by boiling down success stories to a simple formula was also proved false at the seminar.
Another key topic was discussing the soundness of insurance. "It’s a common thought that investing in insurance is only meant for those who are married and with children," said Philam Life Chief Marketing Officer Jaime Jose Javier, Jr.
"In fact, investing in insurance while you’re young is ideal. Despite feeling like you’re invincible at that age, life is full of uncertainties. It’s more ideal to be prepared." he clarified.
"This is especially true when your insurance has an investment that is linked to mutual funds," he continued. "Unit-linked plans allow you to maximize your money’s growth potential and to be prepared for life’s uncertainties at the same time. Philam Life financial advisors will be able to help you accurately identify and address your needs in terms of protection, health, savings, and investments. " he concluded.
Undeniably, there are many misconceptions about investing and financial planning, but luckily there are many professionals that can help explain the seemingly complicated world of wealth building and protection.
For more information and helpful tips on investments and insurance, please visit philamfunds.com.