It’s every Filipino’s dream to achieve financial freedom at some point in their lives. A lot of our waking hours are spent working for money, but when will this end? Eventually, we need to make our money work for us.
Financial freedom is something you can achieve through investing in the Philippine stock market.
In this article, we’ll be giving you a step-by-step guide on how you can start your investing journey in the Philippine stock market.
What is the Stock Market?
The stock market, as the name suggests, is a marketplace for stocks or shares of companies. Stocks are the shares of ownership in a business and by buying stocks of well-known companies you become a shareholder in them.
To make it simpler, try to imagine a public marketplace for fruits, vegetables, and meat. The dynamics of that market are essentially the same as the stock market.
In a public market there are buyers and sellers of goods and prices are driven by demand and supply. The same can be said with the stock market, but this time we’re talking about shares of companies.
What Can You Do in the Stock Market?
Have you ever thought of how you can participate in the growth of the best companies in the Philippines? Usually, when we think of companies like Jollibee the top-of-mind answer would be to franchise your own branch.
The problem with this is franchising, albeit a good option, is not an option that’s available for everyone considering how much capital is required.
This problem is answered by the stock market.
Through the stock market, the public now has an opportunity to join in on the growth of the biggest companies in the Philippines like PLDT, Ayala Land, BDO, and Jollibee by purchasing shares in these companies and being shareholders.
For example, as of April 3, 2023, one share of Jollibee only costs PHP226!
So as these companies continue to make money or as the value of their shares goes higher, as a shareholder you will also gain a profit on your investment.
Why Do Companies Sell Their Shares to the Public?
Now you may be wondering, “Why do companies sell a portion of their shares to the public in the first place?”
That’s a good question, and the main answer is that they need funding. May it be to open up 200 branches internationally, start a new facility in another region, or develop new products.
By shelling out a percentage of their equity to the public, companies can avoid getting a loan from the banks and getting into debt.
Why Should You Invest in the Philippine Stock Market?
As mentioned earlier, one of the ways we can achieve financial freedom is by making our money work for us. If we simply leave our hard-earned savings all in a bank account, the interest rate of 0.125% will get us nowhere.
If anything, it will just lead to the value of our money depreciating!
If you take a look at this chart of the inflation in the Philippines from 2022 to 2023, the interest rates of a traditional bank will not save you from the rising prices of goods and commodities.
This is yet again another problem that the stock market solves. If you learn the ins and outs of investing successfully you should be able to beat inflation over the long run.
So if you want to potentially have your savings grow exponentially over time through compounding interest, beat inflation, and participate in the growth of the best companies in the country, investing in the Philippine stock market can help you hit three birds with one stone.
How Do You Make Money in the Philippine Stock Market?
There are two main ways you can make money in the Philippine stock market, either from capital appreciation or dividends.
Capital Appreciation
When you purchase shares of companies, the price or market value of those shares tends to fluctuate on a daily basis. This can be due to countless factors, but it’s mostly due to the supply and demand mechanics in play.
Your goal as an investor looking to make money through capital appreciation is to own shares in companies where the value of their stock is trending higher.
This is easier said and done as it takes both timing and skill, but if you do your research investing can be a very rewarding endeavor.
Dividends
Another way you can make money in the Philippine stock market is through dividends.
Dividends are a portion of a company’s profits that are distributed among its shareholders as a benefit for believing and investing in the company.
This is a much simpler approach compared to solely relying on price appreciation and is something longer-term investors should take into consideration.
Tools, Requirements, and Eligibility
Tools You Can Use as a Beginner
1. PSE EQUIP
One of the tools that are available to all investors in the Philippines is a platform called PSE EQUIP.
On PSE Equip you can access price charts, news, technical, and fundamental data on all the available Philippine stocks.
The PSE EQUIP is a website and mobile application developed by The Philippine Stock Exchange, Inc, for access to comprehensive and reliable information on the Philippine Stock Market.
2. Tradingview
Another website that is available to investors of all levels is a site called TradingView.
On TradingView you can also access price charts of companies listed in the Philippine stock market. They are a charting platform and social network used by millions of traders globally to spot opportunities in various markets.
TradingView also has various features you can access to help make your investing easier like screeners, heatmaps, and real-time news.
What Are the Requirements for Investing in the Philippine Stock Market?
In order to start on your investing journey in the Philippine stock market, the first thing you’ll need to do is open an account with a stock brokerage.
Think of your stock brokerage as the middleman between you and the stock market. Just like how the internet is the middleman between you and social media platforms.
In order to open an account with a stock brokerage, you’ll need to have the following things:
- One or more valid identification ID
- Valid email address
- Valid mobile number
- A bank account
- Tax identification number (TIN)
These things are on top of the forms you will need to fill up when opening an account. Do note that it’s best to check with your brokerage to see what exactly you’ll be needing.
Most brokerages now offer online account opening which makes the entire process much easier and more convenient.
Who Is Eligible to Invest in the Philippine Stock Market?
Any person who is at least 18 years old with the needed requirements can open an account with any stock brokerage in the country.
Investing in the Philippine Stock Market: A Step-by-Step Guide
1. Learn the Basics of the Stock Market
The stock market is an avenue for anyone to achieve financial freedom if they do it the right way. As with anything in life, the stock market can be a double-edged sword.
If you do your homework and do due diligence, you can be on your way to investing toward financial success. However, if you blindly invest in stocks without doing your research, you will undoubtedly experience large losses.
This is why step number one is to learn the ins and outs of the stock market, and by reading this article you’re already one step ahead!
Here are a few topics that every starting investor should study:
- How the stock market works
- Proper risk management
- The importance of a diversified portfolio
- How to analyze if it’s time to buy or sell a stock
- The bid and ask table and board lot
The great thing about starting your journey today is that there are vast options of learning resources you can turn to, you can check out things like:
- The free and premium content and mentorship of Traders Den PH
- Seminars offered directly by the Philippine Stock Exchange
- Seminars are offered by various local stock brokerages like Col Financial and First Metro Securities.
- Video content on Youtube made by local traders and stock brokers like COL Financial Group, Inc. Check out Col Financial’s Basic Investing Webinar below:
2. Research About Stock Investing Strategies
Investing in stocks isn’t something you should go about blindly. You have to remember that your hard-earned money is on the line. If your investing strategy is to simply buy a stock because your friend told you so, you won’t be around for long.
Now there are countless strategies that are out there for different types of investors. There are strategies for short-term, medium-term, and long-term investors alike.
The two important concepts you will need to know are Technical Analysis and Fundamental Analysis, this is where your strategy will revolve around.
Technical Analysis is the study of price and volume behavior to make better investment decisions, while Fundamental Analysis is when you do deep research on the financials of a company.
These two approaches can be an article in and of itself, stay tuned for our future articles!
3. Open an Account With a Stock Broker
Choosing the right stock broker is a crucial choice for a starting investor. As mentioned earlier, if you want to start on your investing journey, you will need to open an account with any local stock brokerage.
The great thing about most stock brokerages today is you can access everything online. All your buying and selling will be done on their online platform and you also get access to their research reports.
Here are a few of the stock brokerages you should take into consideration:
- COL Financial
- First Metro Securities
- BPI Trade
- BDO Nomura
- AAA Equities
- 2TradeAsia
- RCBC Securities
- PhilStocks
4. Fund Your Account
There are different ways you can fund your account depending on the broker you chose. Almost all brokerages allow for over-the-counter funding through any of the broker’s accredited banks. The funds you deposited should be credited to your brokerage account by the next banking day.
Stock brokers that are linked to banks have an easier funding process for those who have an account with both the brokerage and the bank. Brokers like BDO Nomura, BPI Trade, and First Metro Securities all have easier funding and withdrawal options for those who have savings accounts with their respective banks.
5. Make Your First Investment
And finally, the moment you’ve been waiting for. After learning the basics of the stock market, researching different strategies, opening and funding your brokerage accounts, you can now make your first investment.
Final Thoughts on Investing in the Philippine Stock Market
Hopefully, you found this guide useful as you start on your journey in the Philippine stock market. The beauty of investing is it’s open to anyone who’s willing to set aside money and participate in the growth of both the best companies and the Philippine economy as a whole.
This can potentially be your way towards achieving that coveted first million, or financial freedom entirely.
However, it’s important that you set realistic expectations for yourself. Doubling your money overnight is not likely to happen, but you can definitely make your capital grow over the long run.
Always remember that losses are also part of the game. If you manage your risk accordingly you should be able to have larger profits compared to your losses.
They say that the stock market is the ultimate equalizer of wealth, and if we approach investing in the Philippine stock market the right way we will be more than capable of achieving our financial goals.
FAQs on How to Invest in the Philippine Stock Market
How much of my income should I set aside for investing in the Philippine stock market?
This will entirely depend on your personal circumstances, but a general rule of thumb is you can start with 5% of your income. However, it’s important to note that if you’re in debt, it’s much more important to repay your debts first prior to allocating a large portion of your income to your investment portfolio.
How much capital will I need to start investing?
There are certain banks and brokerages that offer an Easy Investing Program where you can start for as low as PHP500, but a good general amount to start with is PHP5,000 to PHP10,000. Always remember that you should only place in money that you’re willing to lose, given that nothing is guaranteed in the stock market.
How many stocks should I hold in my portfolio?
As a beginner a good amount to hold would be anywhere between six to eight stocks at a time.
Can I become a millionaire by investing in stocks?
Yes! But remember that achieving this milestone will take a lot of hard work and skill.
How much can I earn in one year in the stock market?
This will vary depending on the type of investing you’re doing and the general market conditions. On a good year, you can make up to 20% or more. On a bad year, the goal would simply just be to avoid losing money.
