How do I invest in the stock exchange? Where do I go? How do I start?
There are Filipinos who want to invest. You might have heard about it from financial advisers or read on the Internet that investing is the smart way to grow your money. With an initial investment of P2,000 plus P200 per month in a portfolio that averages 8 percent returns every year, you could get over P427,000 in 30 years.
This is a conservative estimate. The Philippine Stock Exchange index averaged 9 percent on annual returns in the last five years, and compounding interest further increases your profits.
So how do you start investing in the stock market?
Step 1: Learn the fundamentals.
You don’t need to dive into the deep end of investment management, but it will be to your advantage if you know how the stock market works, what it means to become a stockholder, and how you can earn from earning dividends and stock bonds.
One way to start learning is to attend the PSE’s Stock Market 101 Seminar. This is a free seminar that traders and educators from the PSE conduct every Tuesdays and last Saturday of the month at 10:00 AM – 12:00 NN. You can attend the seminar at the PSE Tower in Bonifacio Global City. For those who live outside Metro Manila, don’t worry. The PSE offers this seminar all over the country as well.
To register, go to www.pseacademy.com.ph and choose your desired schedule and location. Bring a printout of your free event ticket on the day of the seminar.
Step 2: Choose an investment broker.
You can only invest in the stock market through an investment broker. You have 131 PSE-accredited stockbrokers in the country. Some have ties with banks (ex: First Metro Securities with Metrobank, BPI Trade with the Bank of the Philippine Islands, and BDO Nomura with Banco de Oro) while others are independent brokers.
How do you choose an investment broker? Many of them offer free seminars where you can learn all about their services and their website (if they provide online services). Choose a broker that you feel comfortable with.
More importantly: Choose an accredited broker that’s listed on the PSE website.
Step 3: Start buying shares.
Your investment broker will guide you through the process of buying your first stocks or shares. Note that investment brokers require different minimum initial investments before you can open an investment account with them.
For example, First Metro Securities require at least P2,500 initial investment for non-Metrobank account holders while COL Financial requires P5,000.
The minimum initial investment is not a fee you pay to your broker. It is the money you can use to buy shares from the companies you want to become a shareholder of. Think of it as a “consumable” payment that will go toward building your investment portfolio.
An investment in stocks can seem complicated and daunting. But if you take the time to learn about the market and how the Philippine Stock Exchange works, you can start to build a secure financial future as you buy and sell, and improve your portfolio.
Why invest in stocks? How do I make my money grow in the stock market?
Historical data has shown that investing in stocks over the long-term provides superior returns. Stocks offer potentially higher yields compared with fixed income instruments such as time deposits, government securities and bonds. There are three (3) rationales for stock investing:
a. Ownership in a company
When an individual invests in the stock market, he automatically becomes a stockholder of a particular listed company. As a stockholder, he is entitled to the following benefits: a.1) voting rights; a.2) dividends to be declared by the corporation; and a.3) share of the remaining assets of the company if it is to be liquidated.
b. Liquidity of funds
A stock market investor has easier access to funds. Compared with banks which require high minimum conditions for deposits and credit, an individual can start an investment for as low as Php 5,000.00. He can cash in or out his funds during trading hours, through his broker.
c. Make money
Investors in the stock market make money through dividends and capital appreciation. When a listed company declares dividends, its shareholders increase their investing power. An investor who buys into the company at a low market price and sells it at a higher price will gain capital appreciation.