How To Start Investing In The Philippine Stock Market

How To Start Investing In The Philippine Stock Market. Investing in stocks (equity) can be one of the most profitable investments any investor can make. However if we're not careful, we can also lose a lot of money instead of making any.  In this article, we'll cover basic steps in how to invest in the stock market.

Investing in stocks (equity) can be one of the most profitable investments any investor can make. However if we're not careful, we can also lose a lot of money instead of making any.

In this article, we'll cover basic steps in how to invest in the stock market.

But first what does it mean when we buy stocks?

When we buy stocks in a company, we become shareholders (part owners). We are entitled to vote in certain decisions and a share of the company's profits. But our ownership is relative to the number of stocks we own. So the more stocks we own of a particular company, the more our vote counts and larger our share of the profits are.

So how do we make money by buying stocks? There are two ways:
  • The stock price appreciates in value (capital gains), which we can then sell.
  • The company pays out dividends (either in stocks or cash)

How do we start investing in the stock market?

I suggest reading the Philippine Stock Exchange's official guide to investing in the stock market.

But the basic idea is that we open an account with a broker; then we can start trading. For a list of legitimate brokers, we can refer to PSE's list of trading partners.

Choosing a broker is an important decision. They provide the same basic services, and we can choose anyone we like. However there are some factors I recommend you consider:
  • Research - Some brokers provide their clients with research to help in their investment, while some do not. It doesn't hurt to be informed, but you should decide how important this is to you.
  • Online access - Some allow you to place orders online through their site. This can be convenient, but it's up to you if this is important.
  • Track Record - It's best to check if they have a good track record. Check how long they've been existing or if they've run afoul of PSE's rules and regulations.

After choosing a broker and opening an account with them, we will be able to buy and sell stocks by placing the order with them.

But before we do any transactions, it would be a good idea to start with paper trading. It's basically a simulation using real market data, but without using our money.

It can be as simple as using our own spreadsheet, and pretending we bought particular stock(s) and then follow the market.

We can also take advantage of PSE's online stock trading game.

Before you buy stocks for real, it would be a good idea to learn how to do fundamental and technical analysis.

Lastly, there are various strategies or techniques when investing in the stock market. It is advisable that you read up on them as well.

We will not be able to detail them all here, but some of the basic ways are:
  • Buy and Hold - buying a stock and holding it for a long time until it appreciates in value. However a lot of research goes into what stocks are undervalued or are likely to have a large increase in value to justify the investment.
  • Active trading - basically, this is buying low and selling high. However there are several techniques under this as well.
  • Cost Averaging - this is a great technique, and has been well discussed by Fitz Villafuerte in his site. I urge you to read about it there.
(Update: Learn about 6 other different stock investing strategies, and decide which one fits you.)

And with that, we should be all-set to start investing in the Philippine stock market. I myself have been investing for years now.

But I would like to caution everyone. When I started, I decided to "wing it" and went ahead investing without reading up on the strategies and techniques of investing in the stock market. Thankfully I did not suffer huge losses, but I also failed to make substantial gains. So please, read and soak up as much information as you can before starting. It really does pay off to be well informed.


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16 comments:

  1. PSE Academy (www.pseacademy.com.ph) provides a comprehensive, interactive, and practical web-based investor education for market participants, would-be equity investors, and the public in general.

    ReplyDelete
    Replies
    1. Hi Christine. I live in U.S.A. and i wish to visit Philippines for an extended period. I trade stocks for a living in the U.S. i would like to know if there is a brokerage account in the philippines i can use to trade stocks there. In the U.S. I use Etrade and TDAmeritrade.
      I hope you see this message and respond. My email address is Joseph_Flores11@yahoo.com

      ThankYou.

      Delete
    2. hi joseph, i can only recommend only 2 online brokers here in the Philippines:

      for faster trading executions, try this: https://www.philstocks.ph/Public/default.aspx
      for detailed fundamental analysis, try this: https://www.colfinancial.com/ape/Final2/home/HOME_NL_MAIN.asp?p=2

      Delete
  2. how can i buy a stock?pls.help,thanks...and how much you can spend?

    ReplyDelete
    Replies
    1. Hi Anonymous,

      Basically you're going to need a broker. The more popular ones are COL Financial, First Metro Sec, BPI Trade, and Wealth Sec.

      After that you can read this blog post and a lot of your potential follow questions should be answered.

      You will be able to spend as much as you want. Depending on the stock you want, you can also invest as low as ~Php500. But usually it's around ~Php5,000 per month (totally voluntary, but somehow that's the usual figure I hear).

      Delete
  3. Hi, Christine,
    I would like to know, Can a Filipino buy a Singapore stock from Manila?
    If yes, please recommend a broker.
    Thank you.

    ReplyDelete
  4. Hi, Christine,
    I would like to know, can a Filipino buy a Singapore stock from Manila?
    If yes, please recommend a broker to open an account.
    Thank you.

    ReplyDelete
  5. Hellow its my first time here and I need to know where to buy an investment and how much is the bracket amount I have no idea and where can I find those brokers im just a simple house wife and dreaming someday I have money on my pocket. Thank you very much

    ReplyDelete
    Replies
    1. Hi Plain housewife,

      My apologies in advance, but I would like to first clarify that if you want money in your pocket, you first need either a job, racket, sideline, business, or some other source of income.

      Investments can only make the money you already have grow a little faster.

      But if you do have money saved up, my advise is to first go to a bank and ask about UITFs and mutual funds. I point you to banks, because I think it would be most convenient for you since they have branches everywhere.

      You can also search for Philippine Stock brokers. Off the top of my head I would suggest looking at COL Financial, BPI Trade, First Metro Sec, or Wealth Sec. There's a bunch of others that are good too.

      Delete
  6. Hellow its my first time here and I need to know where to buy an investment and how much is the bracket amount I have no idea and where can I find those brokers im just a simple house wife and dreaming someday I have money on my pocket. Thank you very much

    ReplyDelete
    Replies
    1. U can open a mutual fund first through sunlife,uitf in bdo or bpi.mutual fund and uitf are good for beginners.u can choose equity fund.they invest in stock market.there are fund managers to monitor ur account

      Delete
  7. tanung ko po kung bumili ako ngayon ng stocks tapos nakalagay ngayon din ibinta anung gawin ko pagdiko nabinta ngayon kasi dapat sa long term ang kunin ko dko nabago yung sa term...anung manyari po sa stocks ko o kailanagn ba mabinta ngayon araw...thank po ng marami sana matulungan nyo ako

    ReplyDelete
  8. Hi everyOne. I read some of your conversations and i am really interested about investing in the stock market and i really want it. Please , anyone can help me teach and lead me to a legit stock market.... thank you verymuch

    ReplyDelete