How to Invest in the Stock Market in the Philippines – MoneySmart Philippines

How to invest in stock market philippines

Video How to invest in stock market philippines

Did you know that for as little as p1,000 “every juan” can start investing in the stock market?

curious, serious, but don’t know where or how to start? Here is a simple guide on how to start investing in the Philippines.

As a beginner, the secret is to be teachable, curious and serious about learning. along the way, you’ll know if it’s for you.

read more to know the pros and cons and also the benefits.

why invest in the stock market?

Stocks are the shares owned by a corporation. You can become a shareholder in a company if you buy shares listed on the Philippine Stock Exchange (PSE).

suppose you buy shares of jollibee, megaworld, and sm investment corp. you become a shareholder of those companies. In other words, you become a co-owner of the company. so why invest? As the company grows, its shares also grow and they receive profits. but if they experience loss, you experience it too.

Stocks offer the most growth potential compared to short-term bonds or other investments. the rates are higher than the rates most banks offer annually. so if you do it long term, your money grows long term.

For example, banks’ annual gross interest rate today ranges from 0.10% to 0.20% as of 2019. If you deposit your money, let’s stay in landbank like ATM savings, you get:

If you start investing in stocks, you can earn more than that and even have 30% if you are day trading. you can grow your investment portfolio every year at 8%, and in the long term in stocks.

however a safe estimate and of course better than 0.10%.

two investment approaches: short-term and long-term

day trading and quick (short-term) profits

If you want quick earnings, you can open an online account at col financial. you can start buying the stocks you believe in the most and trade daily. As a beginner, you will need to learn the basics of technical analysis and get real-time price updates. it would be better if he learned the nooks and crannies of the trade.

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buy stocks and diversify the portfolio (long term)

Another approach is to study, research and more research. Do your research before you buy stocks in companies that you think will do well in the long run. let’s say 5-10 years from now.

Long-term means you’re willing to let your hard-earned money “sleep” for that long.

The longer you hold them, the better the earnings. but again, you need to understand that investing in the stock market involves risk.

You may want to start buying blue chip stocks. These stocks are more liquid and easy to trade. they are not accompanied by high risks and are considered safe investments compared to other stocks.

hint: think about the basic needs: food, housing, electricity, banks. more about top-tier companies in our next blog.

how can you make money in stocks?

1. capital appreciation

each share has a corresponding price. Capital appreciation occurs when your stock price rises. it is the difference between the price you paid when sharing and the current market price.

for example, if you buy shares of the company for 200.00 p. after three days the price rose to 230.00 p., then your capital appreciation is 30.00 p. the realized profit of p30.00 only happens when you sell at p230.00 if you hold it, say after 30 days, then it went up around 270.00, your capital gain is p70.00.

if the price goes down, then you sell it for p200.00, no profit.

2. dividends

Corporations issue dividends to shareholders. these dividends represent the profits of the company that will be shared, either in cash or in additional shares.

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how to invest in the stock market

ready to invest? you can get started on this simplified 4-step process

There are hundreds of pse accredited licensed brokers. you can choose the type of service you want according to your convenience and preference.

1. choose your broker

2. online (col financial, first metro and phil stocks)

Online brokers communicate directly with clients online. clients execute orders and have direct access to market information. colf has received rave reviews as the best and easiest to use online brokerage platform. you can start funding your account for as little as p1,000.00 as of this writing.

how to open a stock market broker account col3. Traditional (Use a licensed broker or salesman to handle account)

These are licensed vendors assigned to handle your account and take orders over the phone.

4. open your brokerage account

You can take advantage of Col Financial’s entry level account at P1,000. you can download the forms here. fill out the forms and attach with the requirements and send them by mail. If you want a quick verification of the documents and approval, you can stop by their office in ortigas.

5. fund your account

You can fund your account through online banking. Once approved, col will provide you with bank details so you can fund your account. you are given a three-month grace period to fund your account for activation.

You can fund your account through a bank deposit or personally deposit the money at your broker’s office.

6. place your order: buy or sell, online or by calling your stockbroker

Again, before you buy or sell, you may want to find out more about the companies you want to buy shares of. To get started, you can read Benjamin Graham’s Intelligent Investor and increase your financial IQ. by robert kiyosaki.

for beginners, you can buy shares on a regular schedule with the same amount of funds. do this if you are going to invest for the long term. is the average cost in pesos where your money grows in the long term.

7. monitor or track your investments

Investing is an ongoing process, as you may want to track and monitor the progress of your stocks. If you choose the online stock broker like Col, you can log in to their website. you can access all the information and data you need.

but wait, there’s more!

what are the risks involved in stocks?

In any investment, there are always risks. it’s a matter of how much money you’re willing to risk. think long-term gains, rather than instant gratification.

First, you have no control over stock prices in the market. one day you may have won 50% of a top-tier company and the next day lose 30% of the losses.

Second, prices are always volatile. they can go up and down. there is a risk of a banking crisis and a recession similar to that of 2008-2009. furthermore, if this occurs, a strong possibility of a global recession may crash the market.

third, the markets also experience corrections and falls.

Last but not least, political and economic concerns can affect markets. you have no control over the markets. For example, the value of the peso and stocks rose when President Duterte claimed presidential victory from him in May 2016.

Investing in stocks is never risk free. But if you start young and early, you can enjoy the growth of your money if you are going to do it for the long term. always stay curious, be a learner and explore as much as you can while investing.

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