A Quick Guide to the Philippine Stock Market

Making money through the Philippine stock market is not as easy as some people think. While entering the stock market is one of the more common ways for Filipinos to dabble into investing, jumping head-first without enough knowledge will cause you to lose that hard-earned money.

Investing in stocks is an intimidating concept for many, and rightfully so, since it’s not easy to earn money. Luckily, there are insurance products with premium allocation on stock investments like BPI AIA’s Medlife Protect Plus, which also dabbles in blue-chip stock investments for you. With the right approach and enough knowledge, you can find success in the market.

What are stocks?

Stocks refer to the shares in a company offered to the stockholders. This denotes shareholder ownership of an organization. The more stocks you purchase, the more percentage of the company you own. If the firm increases (or decreases) in value, you gain (or lose) money.

In stocks, you can grow your money through stock price appreciation and dividends. Stock price appreciation is when the market price of your stock rises, while the dividends are handed out when corporations share their profits with their shareholders. This can be through more stocks or additional cash.

Know that you can only purchase from and sell stocks of publicly listed companies that have announced their initial public offering (IPO), which refers to the process of a private company offering the sale of its stocks to the public. You can find all these stocks being bought and sold in the Philippine Stock Exchange (PSE), Inc.

Quick note: stock trading and stock investment are two different things, albeit they both involve earning profit in the stock market. Stock trading refers to the practice of buying and selling stocks within minutes, days, or weeks for short-term gains. Meanwhile, stock market investment pertains to building long-term wealth, holding stocks for years, and through the market’s rise and fall. 

How do I invest in the stock market?

Understandably, stock investing looks and sounds complicated for the uninitiated. Thus, it’s essential to know how to do it first. Here are the main steps to guide you on how to invest in the stock market.

1. Save up enough money to purchase your first stock. No, you don’t need loads of money to start. The minimum investment amount required is P5,000. So, if you have some P5,000 (or more) you can afford to set aside, you can purchase company stocks and brand yourself as a part-owner.


2. Select an online stockbroker. You can’t buy and sell stocks on your own, so choosing a stockbroker is crucial. Stockbrokers are accredited by the PSE and Securities and Exchange Commission (SEC), and their job is to buy and sell stocks on behalf of investors.
   
   Working with an online stockbroker is better for first-time investors since you can access and make placements through web-based trading platforms.


3. Open a trading account. When you’ve finally selected a stockbroker, the next step is opening an online trading account with your brokerage firm.
   
   You will be asked to submit documents required to open an account, including valid IDs, tax identification number, and other necessary customer information. After submission, wait for the account’s approval, which usually takes a couple of working days.


4. Start your stock investment journey! Once your account is approved, you’re finally ready and good to go. You can start funding the account and place an order to purchase your first stocks.

Related: 6 Simple Ways to Start a Saving Habit as a Young Professional

4 Quick Tips for Investing

It can be challenging to determine what you should and shouldn’t do as a first-time stock investor. Consider the tips below to help you stay on the right track. 

1. Monitor your stocks - While long-term stock investments don’t require daily or weekly monitoring, it’s crucial to check your portfolio from time to time, especially when the stock exchange hits the news. Failing to sell underperforming stocks may cost you a significant amount of money. 
   
   
2. Control your emotions - Anything that involves your money can get your emotions riled up. Don’t invest in stocks because of FOMO (fear of missing out), and don’t give into selling stocks because of baseless hearsay and fear. Don’t make investment decisions based on emotions. Logic and trend watching is necessary.


3. Don’t go all out yet - Seeing high returns on your investment may encourage you to put more eggs in the basket, but the returns aren’t always guaranteed. Before you allocate more funds, make sure you have enough money in your cash flow. Have a mindset of only investing money you can afford to lose. 


4. Keep studying - As with other things, do research and read as much as you can about the industry. Be up to date with the latest by checking industry reports and news. If you have friends who dabble in the stock market, try to see what tips they can offer. Ideally, you want to go for the high performers and tread carefully with newcomers.

Demystifying the Stock Market

It’s not too late to invest—the stock market is not an easy playground, and it is always unpredictable. So make sure to find the right tools, readings, and stockbroker that will help you build a successful portfolio. Hopefully, the article answered most of your Philippines stock market questions.

Are you looking for insurance plans that come with stock investment opportunities like VUL insurance? BPI AIA makes it convenient to inquire and get insured despite the pandemic. You can schedule a virtual appointment with our Bancassurance Sales Executives to learn more!