Investing in the Philippine Stock Market Made Easy (Stock Investment Guide 2019). Investing in stocks is not as scary as what most Filipinos think. When I first learned about online stock investment sometime in summer 2016, I became so excited, did a rigorous web research, and seemed overwhelmed with positive insights consistent across top personal finance blogs.
As soon as I could no longer bear the thrill, I raised a fund from my scholarship and savings and in a few days, dashed for an online stock investment account with COL Financial. Well, I believe I had the fastest transaction ever because as I came home, I already received a welcome email, login credentials, and detailed trading instructions in PDFs. On the next day, I had the historic purchase of my first two stocks (Read also: Paano Ako Pumasok sa Stock Market?).
In less than a year of stock investment, I have earned a passive income that I could not make with the very low bank interest rates (Read also: Bakit Magandang Mag-invest sa Stock Market?).
Why am I sharing you this? You’re not a cynic, I suppose. Stock investment is totally different from networking, and I don’t earn incentives from making you a recruit. However, I encourage you to start your stock investment as it promises hefty benefits. (Read also: Stock Market: Scam o Hindi?) So, come to think of it.
In this article, I’ll walk you through the five simple steps on how to start investing in the Philippine Stock Market with only P5,000.00, and be a partner in the growth of giant companies and the local economy as well.
Stock Investment Made Easy (Beginner’s Guide)
1| Learn the Basics of Stock Investment.
Start with the basics and study the technical aspects later. Financial gurus say that you invest first in knowledge, but this does not mean that you spend months reading all published stock investment books and be awarded ‘best in attendance’ in brokerage-sponsored seminars. Simply learn the basics of stock investment, and these might help:
(a) Stocks are ownership shares in a corporation. Normally, stocks are classified as common, preferred, blue-chip stocks and others (Read also: Iba’t Ibang Uri ng Stocks.).
(b) A stock market is a place where stocks are traded (bought and sold), and the Philippine Stock Exchange (PSE) is the national and only stock exchange of the Philippines. PSE opens its trading floors at 09:30 AM and closes at 03:30 PM (with market recess at 12:00-01:29 PM) from Monday to Friday.
(c) The Philippine Stock Exchange and the Securities and Exchange Commission (SEC) have put in place several safeguards that promote transparent, fair, and organized trade of stocks where investors are protected from fraud, manipulative trading practices, and erring stockbrokers.
(d) In the market, trading of stocks is based on board lot, the minimum number of shares one can trade at a specific price range; however, there is also an odd lot system for other number of shares less than the minimum required.
(e) Stock prices move through a scale of set price fluctuations. Basically, the law of supply and demand and the many factors influence the fluctuations (Read also: Bakit Pabago-bago (tumataas at bumabagsak) ang Presyo ng Stocks?).
(f) Shareholders participate in the growth of the corporations and earn revenues through price appreciation (increase in stock price over time), and dividends (cash or additional shares as part of the profit).
(g) Stock investors and traders play different roles in the market. Generally, stock investors practice the buy and hold strategy, hence buying and holding onto stocks for quite a long term. Stock traders usually try to profit from short-term price volatility and actively trade from a few seconds to couple of weeks.
(h) To enter the market, investors and traders need a stockbroker, a professional individual or a firm that executes buy and sell stock orders for a fee or commission.
(i) Investors and traders place orders online through scripless trading; hence online brokers do not issue stock certificates unless requested (Read also: Frequently Asked Questions: Stock Certificates at Scripless Trading).
(j) Peso-Cost Averaging is a time-tested stock investment strategy of investing a fixed amount of money at regular intervals to minimize risks in a volatile market.
(k) If the stockbroker goes bankrupt, you need not to worry much because the Philippine Stock Exchange and Securities and Exchange Commission have established protection measures for stock investors, and thus, will arrange the transfer of your assets to another stockbroker or the one you prefer.
(l) If the corporation you invested in goes bankrupt, it is obliged to liquidate all assets and pay off all debts. Usual order of debt payment starts with the government, financial institutions, creditors, bondholders, preferred shareholders, and lastly, common shareholders.
(m) Read also: Talahuluganan ng mga Terminolohiya sa Stock Market, and do further research later.
2| Open an Account with a Stockbroker.
In the Philippines, opening an online stock investment account can be as easy as opening a bank account. Usual documentary requirements such as government-issued IDs, Tax Identification Number (TIN), and email accounts, together with accomplished application forms, are submitted for verification and other purposes.
If you already have accounts in major banks such as BDO (BDO Nomura), BPI (BPI Trade), and Metro Bank (First Metro Sec), then you can avail right away stock investment services through their official websites.
Advances in technology have given rise to online stockbrokers and opportunities to small investors to trade stocks at a minimum fee. Also, stock investors and traders can have direct access to and management of stock portfolios. Here are the PSE-accredited online brokers with minimum account funding (upon opening) amount as of February 2019:
- AB Capital Securities, Inc. (P10,000)
- Abacus Securities Corporation (P10,000)
- AP Securities Incorporated (P5,000)
- BA Securities, Inc. (NA)
- BDO Nomura Securities, Inc. (BDO Online Account Required)
- BPI Securities Corporation (BPI Online Account Required)
- Coherco Securities, Inc. (P150,000)
- COL Financial Group, Inc. (P5,000)
- DA Market Securities, Inc. (P50,000)
- Yap Securities, Inc. (P25,000)
- First Metro Securities Brokerage Corporation (P5,000)
- Investors Securities, Inc. (P25,000)
- Lucky Securities, Inc. (NA)
- MayBank ATR Kim Eng Securities, Inc. (P25,000)
- Meridian Securities Incorporated (P25,000)
- Optimum Securities Corporation (NA)
- Philstocks Financial, Inc. (P5,000)
- RCBC Securities (NA)
- Regina Capital Development Corporation (NA)
- Timson Securities, Inc. (P25,000)
- Unicapital Securities, Inc. (P10,000)
- Wealth Securities, Inc. (P10,000)
- and other trading participants *source: Philippine Stock Exchange
Most stock investment beginners choose COL Financial Group, Inc. because of its flexible account options (COL Starter: P5,000, COL Plus: P25,000, and COL Premium: P1M), user-friendly online trading platform, access to expert opinion and comprehensive research, and dedicated customer support. You can visit the website at www.colfinancial.com.
To open an online stock investment account with COL Financial Group, Inc., download (from the website) and fill out application forms, prepare additional requirements such as your Tax Identification Number (TIN) and photocopy of one valid government-issued ID, and submit them personally or via courier.
3| Fund Your Account and Buy Your First Stocks.
Once approved, an email notification including detailed instructions and login credentials will be received. After login, you can explore the different features of your online stock investment account.
You will then be asked to fund your account through online or over-the-counter bills payment services of the four major banks, namely BPI, BDO, Metro Bank, and Asia United Bank, through direct deposit at COL Business Center, or overseas remittance via iRemit.
Successful funding of online stock investment account allows you to make your first trade, your purchase of first stocks. You have more than two hundred stock options in the market, but successful stock investors suggest investing in blue chips or the PSEi stocks.
The Philippine Stock Exchange Composite Index (PSEi) is a fixed basket of thirty (30) common stocks of publicly listed companies, carefully selected by the exchange to represent the general movement of the Philippine Stock Market. As of February 2019, these are the stocks in the composite index:
- Ayala Corporation (AC)
- Aboitiz Equity Ventures, Inc. (AEV)
- Alliance Global Group, Inc. (AGI)
- Ayala Land, Inc. (ALI)
- Aboitiz Power Corporation (AP)
- BDO Unibank, Inc. (BDO)
- Bank of the Philippine Islands (BPI)
- DMCI Holdings, Inc. (DMC)
- Energy Development Corporation (EDC)
- First Gen Corporation (FGEN)
- Globe Telecom, Inc. (GLO)
- GT Capital Holdings, Inc. (GTCAP)
- International Container Terminal Services, Inc. (ICT)
- Jollibee Foods Corporation (JFC)
- JG Summit Holdings, Inc. (JGS)
- LT Group, Inc. (LTG)
- Metropolitan Bank and Trust Company (MBT)
- Megaworld Corporation (MEG)
- Manila Electric Company (MER)
- Metro Pacific Investments Corporation (MPI)
- Petron Corporation (PCOR)
- Puregold Price Club, Inc. (PGOLD)
- Robinsons Land Corporation (RLC)
- Semirara Mining and Power Corporation (SCC)
- Security Bank Corporation (SECB)
- San Miguel Corporation (SMC)
- SM Investments Corporation (SM)
- SM Prime Holdings, Inc. (SMPH)
- PLDT Inc. (TEL)
- Universal Robina Corporation (URC) *source: Philippine Stock Exchange
4| Do Your Homework and Keep Yourself Abreast of Economic Trends.
After your successful placement of orders, don’t be complacent and steadily observe your portfolio as it turns bloody. Of course, you need to devise your own investment strategy since you cannot trust those unsolicited stock tips surfacing on the web. Most of them are just part of pump and dump, stock hyping schemes.
In doing your stock investment homework, start with the difference between the two primary schools of thought – technical and fundamental analyses.
Technical analysis is an evaluation of stock movement based on market factors and data including trading volumes, historical stock price fluctuations, and industry trading trends, hence predicting future stock price movement.
Fundamental analysis, on the other hand, involves calculation of the intrinsic value of a stock based on economic factors such as income and expenses, growth prospects, competitions, and returns on equities.
In short, fundamental analysis is usually part of a long-term investment strategy, and technical analysis, as it is focused on volatility and current market trends, works better for short-term stock trading.
To keep yourself abreast of economic trends and market conditions, I strongly suggest that you download available phone applications, watch news telecast, subscribe to business feeds, and join Facebook groups.
5| Invest and Rebalance Your Portfolio Regularly.
Investing in stocks regularly, say a monthly stash from salary, can pay off. In doing so, you can ride out market storms and benefit from a boost of returns. Employing Peso-Cost Averaging stock investment strategy can be quite boring but as what COL Financial Chairman said:
(a) People enjoy the rush of earning money from something they don’t understand how to do, not knowing that the boring, slowly-but-surely way of investing is what works out in the long term…
What has been emphasized here is the common practice of stock flipping among young investors. Stock flipping can be defined as an over-night, or extremely short-term, trading method employed to earn a sizeable profit. With this, it poses risks especially if bad news suddenly hits the stock, and it results in a failure to maximize the potential profit of a performing stock.
(b) Start by deciding how much money you are comfortable placing in the stock market. Then, rebalance your portfolio regularly, at least twice or thrice a year, so that the amount of money you have in the stock market is always an amount you’re comfortable with…. ** source: COL Financial Newsletter
Accordingly, aside from investing at regular intervals, it is also advised that you rebalance your portfolio regularly. Rebalancing portfolio means realigning the weights of a stock portfolio, hence periodic buying or selling of stocks to keep the portfolio in a desired level of paper asset distribution. While there is no expert advice as to how frequent you should rebalance your portfolio, most recommendations include close examination of allocations once or twice a year.
To rebalance your stock investment portfolio, you can start with these Philippine Stock Market Indices:
- Financials Index
- Industrial Index
- Holding Firms Index
- Property Index
- Services Index
- Mining and Oil Index *source: Philippine Stock Exchange
Yes, investing in stocks can be risky, but not as scary as what most people think. If you can manage risks with safe investment strategies, you can take advantage of the volatile market to secure investment profits.
Disclaimer: The author is not affiliated with COL Financial Group, Inc. (COL), however an online stock investment account holder. Please take this article as a helpful tutorial on how to start investing in the Philippine Stock Market and not a help page for your other problems and concerns with COL Financial Group, Inc. In addition, the author is not a stock investment expert; hence, the article is simply based on his experience, research, and insights.
Editor’s Note: This article was originally published in May 2017 and has been updated for accuracy and recency of data.