There are two ways to invest in the Philippines’ stock market, either directly or indirectly.
Direct investing means you are solely responsible for creating your own investment portfolio – choosing what company to invest in and knowing when to buy or sell them. This will require you to open a trading account and a bit of effort on your part to study the market.
On the other hand, indirect investing means that you are relying on someone else’s expertise in the market. These so-called experts are called fund managers who do the research and facilitate the trades on your behalf. All you need is to choose from a wide variety of funds they offer ranging from fixed-income assets to equities, or a mixture of both.
To directly invest in stocks:
- Open a stock brokerage account
- Create your stock portfolio
Step 1 – Open a stock brokerage account
There are two types of stock broker, online and traditional. For convenience, I would recommend opening an online trading account over a traditional one. This will save you the hassle of contacting someone just to place your orders. As long as you have computer and internet access, you can make transactions anytime and anywhere in the world.
Click here to view the list of online stock brokers from the PSE website.
For starters, I highly recommend opening an account with COL Financial. They’re one of the leading online stock brokers in the Philippines that provides excellent customer support even when you’re overseas.
To open an account, visit www.colfinancial.com and click “Open an account.” Follow the onscreen steps and submit your application. Once your account has been created, fund your account and start building your portfolio.
Step 2 – Create your stock portfolio
In building your stock portfolio, I would recommend having just a limited number of stocks. Try to keep 2 to 3 stocks in different industries in your portfolio. This will diversify your holdings enough just in case a particular stock or sector does not perform well.
If you’re thinking about owning 10 or more stocks, I would suggest buying an Exchange-Traded Fund (ETF) instead or investing indirectly through mutual funds or unit investment trust funds.
- Exchange-Traded Fund (ETF) – an investment fund that can be traded like a regular stock.
To invest indirectly, you have two options – through mutual funds or unit investment trust funds.
- Mutual Funds (MF) – these are professionally managed investment products offered by investment companies.
- Unit Investment Trust Funds (UITF) – similar to mutual funds except offered by banks.
Click here to view the list of registered Mutual Funds from PIFA website.
For convenience, just open an online account with COL Financial as they also provide easy access to a variety of mutual funds in the Philippines.
Now, if you have an account with one of the major banks in the Philippines, chances are that they also offer UITF as one of their investment products. Simply visit their website and browse through their investment products section to find out more.
Click here to view the list of registered UITF from UITF Philippines website.
Direct or Indirect Investing?
If you have time and interested to learn more about the stock market, I would suggest that you invest directly. It can be a bit of a challenge at first but this approach will help you a lot in many ways – learn how to read financial reports, know what company to invest in, and most of all – manage your own investment portfolio.
Otherwise, try to look for reputable investment companies or financial institutions for now and let these fund managers take care of your investments. It doesn’t really matter if you’re invested directly or not. The important thing is that you’re in the market early on with a goal in mind.
In this article, you’ve learned two ways to invest in the Philippines’ stock market – either directly or indirectly.
- Direct investing through a stock broker.
- Indirect investing either through Mutual Funds (MF) or Unit Investment Trust Funds (UITF).
If you have some questions, feel free to drop me a comment below.
Thanks for reading!