Before you can invest in stocks, you need a stock broker.
What is a stock broker?
A stock broker connects the buyers and sellers in the market. If you want to buy or sell a stock, you simply submit a buy or sell 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 percentage of the purchase or sale price.
Types of brokers
There are two types of brokers in the Philippines – traditional and online.
- Traditional – This requires direct contact with the broker for investment advice and execution of trades. Suitable for companies and big investors.
- Online – Having an online broker allows you to invest directly by simply entering your buy or sell order details online using the trading platform provided. All you need is an online trading account and a computer or any mobile device with internet access. Recommended for individuals and small investors.
As of this writing, there are a total of 132 brokers listed on the PSE website and 26 of them are online brokers.
Choosing the right broker
For starters, I recommend opening an account with an online broker. Opening an online trading account requires less capital and allows you to invest directly using a computer or any mobile device that has internet access.
Here’s a complete list of online brokers listed on PSE website.
Having an online trading account gives you full control over your investment, flexibility to trade anytime and anywhere in the world, and to easily monitor your stocks portfolio.
Here are a few things to look out for…
- Registered broker – Always look for a registered stock broker. Make sure they’re registered under Securities and Exchange Commission (SEC) and has trading rights to participate in the stock market.
- Ratings and customer service – When you’re stuck, it’s always good to know that you can easily get support from your trusted broker to sort out your issues. Look for reputable brokers with good ratings and lots of satisfied customers.
- Account features – Are you going to invest in the long term or trade in the short term? Because if you’re going to trade, you will need to have access to live stock charts and streaming market data. Make sure to have these account features when looking for an online broker.
- Investment products – Aside from individual stocks, some brokers provide access to mutual funds, exchange-traded funds (ETF), and bonds. If you’re looking to invest in other asset classes as well, look for brokers who can provide these services for convenience.
- Low fees or commission – There are fees associated when you buy or sell a stock. So, make sure to understand all trading and handling fees as they can quickly eat up your returns.
- Minimum investment capital – Most online brokers will allow you to open an account with as little as P5,000. You might not get all the features you need but at least you can get started right away for that amount of money.
- Funding options – Check all available funding options. When you open an account, you will have to fund it soon in order to buy a stock. Most brokers have partnered with major banks for convenient online bank transfers with zero-deposit fees.
- Withdrawals – After some time, you may want to withdraw some funds on your account. Try to look for brokers that don’t charge withdrawal fees.
- Research Reports – Make sure the broker provides timely research reports so you know exactly what’s going on in the market to help you make informed investment decisions.
- Free trial – Sign up for a free trial. Some brokers provide a 7-day free trial before opening an account with them. This allows you to try out their platform first and have a good feel of how reliable and easy it is to use for trading.
- Free seminars – Sign up for free seminars. When a broker provides free seminars, you know that they’re looking for your best interest because they want to make sure that you know what you’re getting into before making that big decision to invest with them.
- Access to free tools and resources – Check for available tools and resources online. It’s much easier to invest if you have access to free tools and resources online such as guides, tutorials, etc. to help you learn more in reaching your investment goals.
If you’re just starting out, I recommend opening an online trading account. With this, you’ll be able to initiate trades on your own, anytime and anywhere, as long as you have a computer or any mobile device that has internet access.
Right now, there are 26 online brokers to choose from. Visit their websites and learn more about them. Sign up for free trials and check out their trading platforms. See which one suits you.
If you’re stuck, just open an account with COL Financial. They’re one of the biggest online stock brokers in the Philippines, provides great customer support, and I highly recommend them. Opening an account is simple even when you’re overseas.
Here’s a quick tutorial on How to Open a COL Account.
In this article, you’ve learned how to choose a stock broker. If you have some questions, feel free to drop me a comment below.
Thanks for reading!