Jay G. Peñaflor, a Philippine Stock Exchange Sr. Market Education Specialist and who is also a Certified Securities Specialist (CSS), our speaker in the BusinessCoach’s How to Invest in the Stock Market seminar last April 16, 2011, gave us tips on how to determine how much we can afford to invest.
To determine how much we can afford to invest, we need to determine our financial net worth (what we own minus what we owe).
Mr. Peñaflor suggested that a portion of our funds should be in short-term liquid investments, such as bank savings time deposits, and Treasury bills to cover living expenses, and any possible emergencies. The amount to keep will vary according to our individual lifestyle. A practical rule of thumb is to keep at least 6 to 12 month’s worth of living expenses in short-term liquid investments. The remainder of our savings can be invested in medium or long-term instruments such as bonds, stocks or both, depending on the time horizon of our financial goals.
He said that a more conservative approach is to keep at least 75% of our savings in short to medium-term fixed income instruments. The balance of 25% can be set aside for our investment in the stock market.
Mr. Peñaflor explained to us that we can begin investing in the stock market for as low as Php5,000.00.
Additional readings… How do I Start Investing in the Philippine Stock Market >>>
If you like this Early Retirement Investments post, please share to your friends on Twitter, Google+ and Facebook. I appreciate your click in any of the three elegant social media buttons below.