These days, saving money in a savings account is no longer enough. It is crucial that your money works hard for you, or even harder. This is especially true for people working and living overseas, where cash flow seems to go out as quickly as it comes in. One of the best ways to make money work hard for you is through investing. In the case of Filipino-Australians, they can invest in Philippines stocks or shares.
Before you start, however, you need to remember two important things – never invest in anything you do not understand. It is vital that you learn the basics in stock investing, and continue to learn more about it as you go along.
Second, invest only the money you are willing to lose. This is a cardinal rule in any form of investment. Do not put in everything in your bank account on stocks and hope that stock investing will be your cash cow.
An Overview
- When you buy stocks, you own a share of the company you are investing in, making you a part owner. You have a claim on every asset or penny in earnings of a company.
- You can buy stocks from a low-cost brokerage account online. Trading and movement of your money are both done electronically.
- There are thousands of stocks to choose from which is why they are categorised based on size, style and sector.
Choosing Stocks
To choose which Philippines stocks to invest in, ask yourself the following questions:
What are your investment goals?
Financial consultants and advisers all agree that you should have long-term goals when you enter the stock market, ideally 10 years or more. So, if you plan to buy a house in a few years’ time, stock investing may not be the most ideal route. You can look into term (time) deposit, fixed-rate instruments or other financial vehicles with quick returns.
What is your risk profile?
Most stocks with high earning potentials have high risks of crashing, and those that grow slow and steady have minimal risks of going down. If you are a risk-taker, high-risk stocks may work well for you, but if you are a conservative investor, the low-risk kind is your best option.
How much money can you set aside for stock investing?
Stock trading doesn’t give high returns all the time, which is why the money you set aside for it must be extras, and not payment for your expenses or part of your daily or monthly budget. Experts also advise against borrowing money for investing.
Most importantly, you need to understand that there is a learning curve involved in stock investing. Even if you work with a broker, you still need to familiarise the basics.
How to Invest
The Philippine stock market gives you an opportunity to buy stocks from big companies, such as Jollibee (fast-food chain), SM, GMA, PLDT, etc. Just check the Philippine Stock Exchange (www.pse.com.ph) for a list of companies. You can also download the app PSE Edge through the Apple App Store or Google Play for real-time updates you can check through your mobile phone.
You can start investing through various online brokerage firms in the Philippines. A list of these online brokers are also available at the website of the Philippine Stock Exchange (http://www.pse.com.ph/stockMarket/tradingParticipants.html?tab=1). These companies offer different services and have different starting fees before you can start trading in the Philippine market. The range is between PhP5,000 and PhP50,000. Some online brokerage firms also have different tiers based on investment.
You can choose based on your preferred services (stock market report, and on your budget. Convenience is also a consideration because some companies prefer personal appearance for setting up an account.
The requirements for opening an online account for non-resident and non-citizen are almost the same. Fill up the company account information form, sign the signature cards, securities agreement and present pertinent documents such as social security, tax identification, driver’s license or passport. Others would add billing statements to the list, and prescribe that documents be certified by the embassy or consulate.
The next step is to submit the documents by post and wait for an email confirmation from the brokerage firm that the account has been set up. To fund your account, you can either use remittance companies or wire the money directly to the account of your chosen brokerage firm. Once funded, you can start trading.
A press release from the Philippine Stock Exchange reported that online accounts account for 27 percent of the total stock market accounts in the Philippines. Online trading has increased the retail investment segment of stock trading. It has also expanded the market base to include not only investors in Metro Manila but also in Visayas and Mindanao as well.
With this tool also available to investors outside the Philippines, more traders can participate in Philippine stock trading.
If you don’t know what’s the difference between share trading and investing. Read our related article Online Share Trading vs Investing: Which one is for you? to learn more.
Did you find this article useful? Do you have some ideas of your own that you can share to our readers? Share your own experience by leaving a comment below.
