So you’ve finally set aside some money to invest in the stock market. You’ve also managed to open a stock brokerage account.
Ready to buy that first stock except that there are over 200 stocks to choose from and you have absolutely no idea where to start.
Right now, there are a total of 271 publicly-listed companies on the PSE website.
When I was just starting out, I had the same problem too. I thought I was ready to buy my first stock but instead, I got overwhelmed by the number of choices.
I knew some popular companies to begin with but I wasn’t entirely sure if that being “so popular” was enough reason to invest in them.
And since stock prices go up and down in the short term, I wanted to make sure that I would get them at a reasonable price.
To help you pick your first few stocks, here’s what you can do…
Start with companies you already know
It’s always a good idea to invest in companies you’re familiar with. Since I grew up in the Philippines, I’ve known a few good companies like the Ayala, Jollibee, San Miguel, SM, PLDT, and more.
When you know the products or services they provide, it would be much easier for you to understand how they make money and the risks involved in their businesses.
The stock market is considered a high-risk, high reward investment. It’s highly volatile in the short-term but tends to perform better in the long term.
If you understand and believe in the company you’re investing with, you’re more likely to stick with it even when you see price fluctuations in the short term.
This can help you avoid overtrading from panic buying and selling because you’ll be comfortable knowing that the business will continue to deliver great results regardless of whatever the stock price might do in the short term.
Choose from the PSE Composite Index (PSEi)
The PSEi consists of the Top 30 performing companies in the Philippines.
They are also called Blue-Chip stocks which are carefully selected to represent the general movement of the market.
If you choose to invest in any of them, you know that you’ll be investing in reputable companies with well-established businesses in the Philippines.
Use COL’s Investment Guide
If you’ve opened an account with COL Financial, you can take full advantage of their comprehensive research reports and investment guide.
When you log in to your COL account, just head over to Research > Fundamentals and click on Investment Guide.
Here, you’ll find a list of recommended companies across different sectors.
Just make sure to choose a company with a Buy rating and consider buying below the Buy Below Price to maximize your earning potential.
Refer to COLing the Shots
If you want a more streamlined list of recommended stocks, you might want to check out COL’s monthly stock picks or model portfolio called COLing the Shots.
A monthly publication by COL which provides insights on investments opportunities based on global and local development that could affect the market. COLing the Shots aim to provide timely and relevant information and analysis as well as a model portfolio for successful investing.
You can find this report under the Research tab.
The table above serves as a model portfolio which usually consists of 5 to 10 selected stocks across different industries providing instant diversification.
Same with the Investment Guide, consider buying stocks with current market prices lower than the Buy Below Price to maximize your earning potential.
Consider Equity Index Fund
If you’re not comfortable investing in individual stocks right now, consider investing in something like a stock market index.
Using COL’s trading platform, you can invest in Mutual Funds through their COL Fund Source.
Right now, there are a total of 26 funds to choose from and 4 of them are Equity Index Fund which invests in stocks that are components of the PSEi.
So instead of buying individual stocks, you’ll be buying a basket of stocks that closely tracks the target index.
Picking your first stock shouldn’t be that difficult at all.
You can always start with companies you already know. Then learn more about them by reading those research reports provided by your broker.
To easily filter out good stocks to buy, simply refer to COL’s investment guide or model portfolio and refer to each company’s reports to know why they’re being recommended.
With this, you should be able to come up with a list of around 3 to 5 stocks you’re interested to invest in.
If you’re still unable to decide, then just consider investing in a stock market index instead for now.
Like any stock investment, investing in an index fund can potentially help achieve your financial goals over the long run.
There you have it! I hope this article has helped you pick your first few stocks. If you have some questions, please feel free to drop me a comment below.
Thanks for reading!