Invest in the Philippines!
We need to advocate for more mechanisms so that more and more Filipinos can support the Philippine economy through investments in the stock market. Through this post, I also hope I can encourage you to learn more about how stock investment works and how you may benefit from it.
Through my own research, learnings, and recommendations of friends, I bought some shares of a company last year at PhP 6/share. Now, the share price of this company (as of Nov. 20, 2006) is at PhP 9.5/share! That means, my investment already earned me a PhP 3.5/share gain, right? Not bad, indeed!
For those who are also buying stocks, what are your strategies? Are you a long-term investor? When did you last sell your shares and what were the reasons? What will encourage you to start investing (if you are not doing it yet)? I am pondering on these questions as I am looking at developing a system where ordinary people and workers can invest in the Philippine Stock Market without subjecting them to significant risks. Naturally, stock investing entails some risks but I think an innovative system could still be developed and curated for specific markets/segments.
Anyway, some say stock investing is like gambling and that is true – one cannot predict how the market behaves the next day. However, historically, markets just go up and down. That’s just how things are. Anything that falls should also rise, right? It’s not always that simple but at the very least, that’s how the world operates in general so it is better to prioritize medium- and long-term investments (rather than the short-term or more speculative ones). (In some cases, moderate risks are alright but try not to panic when share prices suddenly plunge. Tomorrow may be a better day. Remember the saying, “what goes down will eventually rise again.”)
One thing to consider though is to choose companies whose values align with yours. In my case, I am buying into companies that have good reputation and where my hard-earned money will be put to good use. For example, I choose them because I know that they are serious in their environmental programs. And tthat hey do have serious environmental culture. That’s my No.1 reason for investing in them. Of course, I also analyze their performance over the years. Thus far, my research notes point to one thing – the companies I believe in will likely be strong companies in the years to come.
I am sharing this personal experience with you guys because I continue to believe in this country. And one sure way to help this country directly is to invest in the stock market. Not only are you helping the economy directly (more money in investments means more jobs) but you’re also helping yourself build your economic base for your dreams. Isn’t it nice to lead a comfortable life but at the same time, know that your money is helping your country, too? So do consider investing as an option! (But read and study first before you engage in stock investment!)
I am also writing this as a way to encourage our overseas Filipino workers and those living and earning abroad to consider investing in the Philippine Stock Market, too. For those of you who have relatives abroad, please feel free to forward this blog entry (or send them my email address). I’d call it a personal mission. Through this blog, I hope to make a difference. I dream of a time when our farmers, fisherfolks, teachers, freelancers, and those abroad (e.g., engineers, nurses, domestic helpers, caregivers, seafarers, artists etc.) are also owners of companies here in the Philippines through stock ownership. Remember, when you buy a company’s shares, you become a part-owner of that company! Isn’t it a nice thought?
However, remember that money is not everything. It’s nice to have them and enjoy the security they give. However, remember also that our relationships are still the most important reasons why we are working so hard so don’t forget to love and give more even if your pocket doesn’t have much to spare. It’s really our hearts that carry the most valuable assets in this world so isn’t it great to know that these assets are limitless?
So shine, love and give. It doesn’t cost much.
Below are some notes lifted from www.pse.com.ph. Hope they can be good starting points for learning more about stock investing. Happy investing!
Q. How do I make money in the stock market?
A. One can make money in the stock market through the price appreciation (capital gains) of his shares or through cash or stock dividends. A shareholder can also benefit from stock rights.
Q. Where can I buy stocks?
A. An investor can buy stocks listed on the PSE through its authorized and active trading participant.
Q. How are shares bought or sold?
A. If you wish to buy shares of stocks, you could enlist the services of a broker who will do this for you since PSE is not directly involved in the buying and selling of securities. [Update in 2017: There are also accredited online brokers that charge reasonable fees. Moreover, many banks also allow their clients to invest via pooled funds through regular subscription (usually via auto-debit), which the banks use to invest in different instruments such as Unit Investment Trust Funds or UITFs. Consult your banks for more details.]
Q. When can I buy stocks?
A. Trading is done at the PSE trading floor during weekdays from 9:30 a.m to 12:10 p.m. except during legal and special public holidays.
Q. Is there any risk involved in investing?
A. While it is true that stock investment is the most volatile of all securities, investors might well remember that uncertainty is a permanent feature of the investing perspective. This means that risk is always a part of any investment. A better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set, and calculated decisions should be made when this level is reached.
Q. Why invest in the stock market?
A. There are 3 rationale 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 an easier access to funds. Compared to banks which require high minimum conditions for deposits and credit, an individual can start an investment for as low as Php 1,000 and can expect high yields for his initial investment. He can always cash in or out his funds anytime, 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.
Q. What is the minimum amount of initial investment?
A. The minimum amount of money needed to invest in the stock market depends on the minimum number of shares to be traded for the stock. The minimum shares will be determined by the prevailing market price of a particular stock. For each stock, the minimum number of shares to be traded is fixed and depends on the price range of the stock. The Board Lot table shall aid the investors as to the amount of money needed as initial investment.
Q. How do I choose my broker?
A. An individual investor should choose a retail broker, preferably one that meets his requirements in terms of services needed. When he lacks the time to analyze individual companies and stocks, then a full service broker is recommended. In choosing a broker, the investor should see to it that the broker is a member of good standing at the Philippine Stock Exchange. It is important that the investor should trust his broker and that he is satisfied by the services it is giving him, such as market reports, quality of advice regarding stock selection and timing of purchases and sales, quality of trade executions, on-time delivery of important documents and other services.
For information on the various services offered by member-brokers, you may get in touch with he PSE Public Information and Assistance Center (PIAC).
Q. Do I need to have a physical evidence of my stock ownership?
A. The PSE through its central depository (PCD) uses the computerized book-entry system (BES) to transfer ownership of securities from one account to another, thus eliminating the need for physical exchange of scrip between buyer and seller. The trading system where settlement is carried out via book-entries, rather than by the movement of physical certificates. This system is called scripless trading. However, you may still request for an upliftment of your shareholdings to get a physical certificate.
Q. How are settlement and clearing done?
A. Equity securities move between securities accounts held by the different participant-brokers of the PCD. Stock market transactions are settled on the third day after the trade. Transfers are based on trades done at PSE. Shares are transferred on settlement date (T+3) to the buyer, and the buyer pays the seller through the clearing banks within the same settlement period. This means that transactions done on Monday must be settled by Thursday. Settlements of accounts are done in the clearing house.
[Re-post of a blog dated November 20, 2006 (from my previous site). Some information here may no longer be accurate nor updated so refer to the PSE website and your trusted brokers for more in-depth information and guidance.]
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