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I started investing in stocks in 2013. Back then, I didn’t know where and how to start. I had no one to ask. No one in the family invests in the stock market, neither my friends or colleagues.
And when I asked one of my colleagues, I was even told that it was a scam and that I should avoid it. But that didn’t stop me. Good thing there were a lot of free resources online that helped me get started.
If you’re looking to invest in the Philippines’ stock market, here are 5 quick steps to start investing.
Step 1. Set aside extra money to invest.
You need money to invest. Without it, you won’t be able to buy shares of companies let alone open a stock brokerage account.
The minimum amount of money you will need depends on two things – the minimum number of shares you can buy which varies by stock and the initial investment capital you need to open an account.
Most stockbrokers will allow you to open an account with as little as P5,000. Some of them would even go as low as P1,000 just to encourage you to start investing with them.
If you have a job, the easiest way is to set aside a portion of your salary as soon as you receive your paycheck. Doing this consistently will allow you to accumulate enough funds so you can start investing soon.
And the more you set aside, the faster you can get started.
You should also know that there are no guarantees when it comes to investing. Meaning, you may make or lose money in the process. That said, the money you should be investing is something you won’t be needing for a long time, say five years or more.
The reason being is that the stock market is considered as a high-risk, high-reward investment. Stock prices may go up or down in the short term but it tends to perform better in the long term.
So think about having that extra money first before committing yourself to invest.
What I would suggest is to build enough cash buffer for emergencies. Most people would suggest having at least 3-6x worth of your living expenses.
When I lost my job before, it took me about 3-4 months to replace that income. So, to make it easier for you to compute, just think of how much time and money you will need to cover in case you lose your job today.
That way, you’ll have enough time to replace that income and you won’t even think about selling your investments. Because the worst thing that could happen is when you’re forced to sell your investments at a loss when the market hits a downturn.
Once you have that extra money, only then you should consider investing.
Step 2. Learn at least the basics of the stock market.
I was in Dubai when I started investing in stocks. I couldn’t attend those free seminars provided by some stockbrokers so I had to rely mainly on investing books and other free resources online to learn more about it.
But you know what I realized?
You don’t actually need to learn everything about it. As long as you understand the basic concept – what it is, how it works, and how to make money from it, you should be able to start investing and then learn more about it as you go.
There are a lot of free resources online that can teach you about the stock market. When I was just starting out, I had found a short video from Pesos and Sense – a TV show hosted by Aya Laraya which clearly explained the basics of the stock market.
And from that short video, I was able to get a good grasp of what investing in the stock market is all about.
I’ve tried going back to the site but it seems the link to the video has been broken. If you’re interested, here’s the link to the short video from Youtube instead…
Another online resource I found quite useful is PinoyInvestor. It is both a free and paid online resource where you can get stock analysis, reports, and recommendations from the biggest brokerage firms in the Philippines.
When you sign up for a free account, you get access to PinoyInvestor Academy where you can learn more about the basics of stock investing.
Step 3. Open an online trading account.
Before you can invest in stocks, you need to have a stockbroker.
A stockbroker connects the buyers and the sellers in the market. If you want to buy or sell a stock, you simply place an order and they will execute the trade on your behalf.
In exchange for their services, you’ll be charged a flat fee or commission based on the percentage of the purchase or sale price.
As of this writing, there are a total of 131 trading participants listed on the PSE website and 27 of them are online brokers.
You can browse through that list and check out the broker’s website you’re interested in. I believe most of them have free trials so you can try out their trading platform first and decide if it’s a good fit for you.
I remember signing up for a free trial with two other brokers before I decided to go with COL Financial. They’re one of the largest and leading online stock brokers in the Philippines and I highly recommend them.
Here’s a quick tutorial on How to Open an Account with COL Financial.
After you open an account, make sure to fund the account so you can start buying stocks.
Step 4. Pick your first couple of stocks.
Once you have access to your account, you can start looking for companies to invest in.
As of this writing, there are a total of 271 publicly-listed companies on the PSE Edge website.
You can browse through that list and check each company’s website to find out more about them. But since there are a lot of companies to choose from, I don’t think it’s a good idea to check them all out.
What I would suggest is to start with companies you already know and trust. When I was just starting out, I had a few companies in mind but I didn’t invest in them straight away.
I was unsure about the stock prices and I didn’t want to pay a premium just to own them. I had to make sure that I would be spending my hard-earned money’s worth in a good stock.
The problem was, I didn’t know how to evaluate companies.
So what I did initially was to simply rely on my broker’s recommendations and figure out how they do their evaluations so I can learn from it.
Here’s a quick tutorial on How to Pick Your First Few Stocks.
Another option is to choose a company included in the PSE Composite Index.
The PSE Index is a fixed-basket of 30 carefully-selected stocks (also known as bluechip stocks) that represents the general movement of the stock market.
These are big companies that have well-established businesses in the country.
If you can’t decide what stock to buy, then I suggest you start by following your broker’s recommendations as well. With COL Financial, you get access to company reports, investment/technical guides, and monthly stock picks called COLing the Shots.
But don’t just invest in them blindly. Pick a few stocks from their recommendations and figure out why they are being recommended so you can learn how to pick good stocks on your own eventually.
You might also want to learn the basics of Fundamental and Technical Analyses so you can come up with your own investing strategy. This is what I use to determine what stocks to buy and know when to enter and exit the market.
Step 5. Buy your first stock.
Now that you know what companies to invest in, start buying your first stock. Buying a stock is easy. Just log in to your trading account, place an order, and then wait until it gets executed.
Here’s a quick tutorial on How to Buy a Stock with COL Financial.
Just a quick tip: When buying a stock, I recommend spending at least P8,000 to maximize trading fees.
Also, try to limit your portfolio to a maximum of two to three stocks only. This way, it will be easier for you to monitor your investment.
If you’re planning to own more than that, say 10 for example, then I would suggest investing in an Equity Fund or Equity Index Funds instead.
That’s it! I hope this post has helped you to get started investing soon. If you have some questions, please feel free to drop me a comment below.
Thanks for reading!