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, a stock brokerage firm.
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 made the historic purchase of my first two stocks.
In years of stock investment, I have earned a passive income that I could not make with the very low bank interest rates.
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. So, come to think of it.
Pros and Cons of Investing in Stocks
What are the advantages (pros) and disadvantages (cons) of investing in stocks?
Advantages. Like any other investment instruments, investing in stocks comes with advantages (pros), and some of them are:
- You can build a massive wealth in a short period of time.
- You’re offered a diversification for your investments. As the common piece of advice goes, don’t put all your eggs in one basket.
- You can start investing with a small capital, or for as low as PHP5,000.
- You don’t need much technical knowledge and skills.
- You can earn investment returns through price appreciation and dividends.
- You have hundreds of local company stocks to choose from based on your risk tolerance.
- You technically own stakes in these companies.
- You can protect your hard-earned money from inflation.
- Your investment is well-protected by government regulatory bodies.
- Your stock investment comes with great liquidity. You can buy and sell your stocks in a matter of minutes.
- You can have an instant online access to your account and funds.
- You can take advantage of and participate in the growth of the economy.
Disadvantages. On the other hand, the common disadvantages (pros) are:
- Your investment returns are not guaranteed.
- Your stock investment comes with one of the highest investment risks in the market.
- Your stocks and the whole stock market are volatile. Stock prices rise and fall dramatically.
- You may lose everything if you don’t know what you’re doing, especially if you’re impatient.
- You may not catch the right timing when to buy and sell stocks.
- Your decision may be influenced by misinformation or stock hyping.
- You may need such a long time to grow your investment capital.
- You pay taxes and brokers’ commissions on profitable stock sales.
- You may be required to spend a lot of time doing your market and technical research.
- You are competing against institutional and professional traders and investors.
- You may suffer from emotional ups and downs.
- You may get paid last should the companies you invest in get bankrupt.
How to Invest in Stocks (5-Step Guide for Filipino Beginners)
Now, let me 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.
Here’s a quick outline or summary of the steps:
- Learn the basics of investing in stocks.
- Open a stock trading account with a reliable stockbroker.
- Fund your account and buy your first stocks.
- Do your homework and keep yourself updated about economic and market trends.
- Invest and rebalance your portfolio regularly.
Step 1: Learn the Basics of Investing in Stocks
Take your time. 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:
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.
The basic approach to stock investing is buying stocks when the price is low and then selling when the price is at its highest.
Stock market is a place where stocks are traded, i.e., bought and sold. 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.
The Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC) are the primary regulatory bodies. They 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.
Buying and selling of stocks are based on board lots. In the stock market, a board lot is 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.
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?
Price appreciation and dividends are the two basic ways to earn profits. Shareholders participate in the growth of the corporations and earn revenues through price appreciation, i.e., increase in stock price over time, and dividends, i.e., cash or additional shares as part of the profit.
Stock investors practice the buy and hold strategy. They buy and hold onto stocks for quite a long term.
Stock traders are active buyers and sellers of stocks. They usually try to profit from short-term price volatility and actively trade from a few seconds to couple of weeks.
Both stock investors and traders need a stockbroker to enter the market. A broker is a professional individual or a firm that executes buy and sell stock orders for a fee or commission.
Both stock investors and traders place orders online through scripless trading. Online brokers do not issue stock certificates unless requested. Read also: Frequently Asked Questions: Stock Certificates at Scripless Trading.
Peso-Cost Averaging is a time-tested stock investment strategy. It entails investing a fixed amount of money at regular intervals to minimize risks in a volatile market.
If a stockbroker gets bankrupt, stock investors and traders remain protected. The Philippine Stock Exchange (PSE) and Securities and Exchange Commission (SEC) have established protection measures for stock investors, and thus, will arrange the transfer of your assets to another stockbroker or the one you prefer.
If the corporation invested in goes bankrupt, stock investors and traders still get paid. 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.
Social trading is a form of investing that allows investors to observe the trading behavior of their peers and expert traders. It has become a trend especially among young traders and investors. You might want to do some research and look for the best social trading broker out there.
Step 2: Open a Stock Trading Account with a Reliable 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 Securities), 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.
- AB Capital Securities, Inc. (P10,000)
- Abacus Securities Corporation (P10,000)
- AP Securities Incorporated (P5,000)
- BA Securities, Inc. (NA)
- BDO 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
COL Financial, BDO Securities, First Metro Securities, BPI Trade, and Philstocks – are the most popular stock brokerage firms that offer online trading platforms in the Philippines.
How to Open a Stock Trading Account with COL Financial. 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.
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.
You may now open an account online by simply signing up here: COL Account Online Opening.
You will be asked to upload your requirements together with signature cards and selfies. Accordingly, a video call may also be conducted at a later time.
How to Open a Stock Trading Account with BDO Securities. BDO Securities is a wholly owned subsidiary of BDO Capital & Investment Corporation. It has a strong parent company support from BDO Unibank (BDO), the country’s largest bank.
For BDO Unibank accountholders enrolled in BDO Online Banking, account opening comes very easy. Simply sign up using the same username and password.
Fill out the Investor Profile Sheet and accomplish the Investor Suitability and Enrollment Validation forms.
Review the details and wait for the confirmation via email. Read the complete guide here.
How to Open a Stock Trading Account with First Metro Securities. First Metro Securities is the stock brokerage house of the Metrobank Group. Metropolitan Bank and Trust Company (MBT) is also one of the largest banks in the Philippines.
You can open a stock trading account by downloading and installing its mobile app, FirstMetroSec Go. Launch the app, then sign up to start your account application.
Easily set up your account by filling in all the necessary information, uploading the required documents, and completing the selfie verification. You may read the account opening guide here.
How to Open a Stock Trading Account with BPI Trade. BPI Trade is the fully integrated online trading platform of BPI Securities, the stock brokerage arm of the Bank of the Philippine Islands (BPI).
It enables clients to post online orders to the Philippine Stock Exchange, offers real-time stock market quotes and comprehensive research.
To open a trading account, go to www.bpitrade.com. Fill out the BPI Trade Client Account Information Form. Download the accomplished form, print, and sign three (3) times on the lines provided.
Submit the scanned form and other requirements to [email protected]. You may also submit the original form and other requirements to any BPI Branch near you or personally visit the BPI
Securities Office. You may read the complete account opening guide here.
How to Open a Stock Trading Account with Philstocks. Philstocks Financial Inc., or simply Philstocks is another leading stock brokerage firm in the country.
It continuously innovates its products and services to make the stock market more accessible for the investing public. Since its establishment in 2001, it has consistently endeavored at providing precise and top-quality trading experience.
To open an online trading account, simply register online through their website, upload valid IDs and a selfie for verification, and fund your account via partner channels.
You may check and read the complete account opening guide here.
Step 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.
With COL Financial for example, you will 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 March 2023, these are the stocks in the composite index (based on PSE Edge website):
Ayala Corporation (AC). It is the holding company of the Ayala Group of Companies, with principal business interests in real estate and hotels, financial services and insurance, telecommunications, water, industrial technologies, power and automotive, and outsourcing, among others.
AC Energy Corporation (ACEN). It is the listed energy platform of the Ayala Group. It has approximately 3,000 MW of attributable capacity in the Philippines, Vietnam, Indonesia, India, and Australia.
Aboitiz Equity Ventures, Inc. (AEV). Its core businesses, conducted through its subsidiaries and affiliates, are grouped into five main categories: power generation, distribution and retail electricity supply, financial services, food manufacturing, real estate, and infrastructure.
Alliance Global Group, Inc. (AGI). It is engaged in the business of property development, food and beverage manufacturing and distribution, quick service restaurants and integrated tourism development.
Ayala Land, Inc. (ALI). It is engaged in the planning and development of large scale, integrated estates having a mix of use for the sale of residential lots and buildings, office buildings and commercial and industrial lots, leasing of commercial and office spaces and the development, operation and management of hotels and resorts.
Aboitiz Power Corporation (AP). Its business operations are divided into four strategic business units namely, power generation, power distribution, retail electricity services, and distributed energy.
BDO Unibank, Inc. (BDO). It offers an array of products and services such as retail banking, lending (corporate, commercial, consumer, and SME), treasury, trust, credit cards, corporate cash management, and remittances, among others.
Bank of the Philippine Islands (BPI). It offers wide array of financial services that include corporate banking, consumer banking, investment banking, asset management, corporate finance, securities distribution, and insurance services, among others.
Converge Information and Communications Technology Solutions, Inc. (CONVRG). It offers fixed broadband internet services, private data network solutions, cloud and colocation services, and other connectivity solutions to residential and enterprise customers.
Emperador, Inc. (EMI). It is currently a holding company which operates an integrated business of manufacturing, bottling, and distributing distilled spirits and other alcoholic beverages.
Globe Telecom, Inc. (GLO). It is a telecommunications company that provides digital wireless communication services nationwide under various brands using a fully digital network.
GT Capital Holdings, Inc. (GTCAP). It holds interests in automotive assembly, importation, distribution, and financing, banking, property development, life and non-life insurance, infrastructure and utilities, and motorcycle financing.
International Container Terminal Services, Inc. (ICT). Its principal business is the operation, management, development, and acquisition of container terminals.
Jollibee Foods Corporation (JFC). Its principal business is the development, operation, and franchising of quick service restaurants (QSRs) under various trade names.
JG Summit Holdings, Inc. (JGS). It is a holding company for a group of companies with substantial business interests in foods, agro-industrial and commodities, real estate and hotels, air transportation, banking, and petrochemicals.
LT Group, Inc. (LTG). It has expanded and diversified its investments to include the beverages, tobacco, property development, and banking businesses.
Metropolitan Bank and Trust Company (MBT). Its principal business activities involve deposit-taking and lending, trade finance, remittance, treasury, investment banking, and thrift banking.
Megaworld Corporation (MEG). Its real estate portfolio includes residential condominium units, subdivision lots, and townhouses, as well as office projects and retail spaces.
Manila Electric Company (MER). Its principal business is the distribution and sale of electric energy through its distribution network facilities in its franchise area.
Monde Nissin Corporation (MONDE). It has two core businesses – the Asia-Pacific branded food and beverage business and the meat alternative business.
Metro Pacific Investments Corporation (MPI). It has investment and business interests in power, toll operations, water, healthcare, rail, and logistics, among others.
Puregold Price Club, Inc. (PGOLD). It conducts its business operations through several retail formats and store brands such as hypermarkets, supermarkets, and discounters.
Robinsons Land Corporation (RLC). Its operations are divided into five business divisions such as the commercial centers, residential, office buildings, hotels and resorts, and industrial and integrated developments.
Semirara Mining and Power Corporation (SCC). It has existing coal supply contracts with its own power subsidiaries as well as other power plants, cement manufacturers, and other small boiler users.
San Miguel Corporation (SMC). Its product portfolio includes beer and spirits, non-alcoholic beverages, poultry, animal feeds, flour, fresh and processed meats, dairy products, coffee, various packaging products, a range of refined petroleum products, and cement.
SM Investments Corporation (SM). It serves as the holding company of the SM Group with interests in retail, property, and banking.
SM Prime Holdings, Inc. (SMPH). It has four business units – chain of malls, residential units, commercial establishments, and hotels and convention centers.
PLDT Inc. (TEL). It is an integrated telecommunications service provider in the Philippines with its business activities categorized into three units – wireless, fixed line, and others.
Universal Robina Corporation (URC). It is involved in a range of food-related businesses, including the manufacture and distribution of branded consumer foods, production of hogs and poultry, manufacture of animal feeds and veterinary products, flour milling, and sugar milling and refining.
Wilcon Depot, Inc. (WLCON). It is a home improvement and construction supplies retailer that offers its products via two retail formats – the depot store format and the home essentials store format.
Step 4: Do Your Homework and Keep Yourself Updated About Economic and Market 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.
Step 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, “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.
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.
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
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. This article is simply based on his experience, research, and insights. This article was originally published in May 2017 and has been updated for accuracy and recency of data.
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