Getting Started on the Philippine Stock Exchange

So, you are good boy or girl and has been diligently saving up part of your salary for your future. The problem is, a typical savings account in the bank gives you 0.50% interest rate per annum. (That means you get Php 50 interest if you left a deposit of Php 10,000 in the bank for a whole year! That’s not even taxed yet.) So, with annual inflation rate in the Philippines estimated at 3.80% annually, you can obviously see just keeping money in the bank is not a very good investment decision.

While keeping cash in the bank is a solid part of financial management, those are more for monthly living expenses and for emergency needs. There are also many options of investments to explore and there is no correct answer to that. It’s largely a risk-versus-rewards thing and it varies from each person’s investment goals and risk tolerance.

To understand more on my point of view on this, you may want to refer to an old article of mine about Modern Financial Planning.

However, in this one, I will talk about to get started on the Philippine Stock Market. First, some background information. The stock market here in the Philippines is called the “Philippines Stock Exchange“(PSE). Trading hours are from Monday to Friday at 9:30am to 12:10pm except during legal and special holidays. A good number of questions are answered in their FAQ section.

The general idea of the stock market is to buy shares of a company while it is priced low, and sell when it gets high for profit. There are many approaches you can take, like are your investments short-term or long-term? Do you go for fundamental analysis which base your stock decisions on the business performance of a company or do you go for technical analysis which base stock decisions on price action and charts. There is no right or wrong here again and money can be both made and lost either way.

So, how do you get stated?

1. Ask yourself, Is this for me?

You have to understand you can lose money on the stock market. While this is not gambling, it can be very similar if you do not know what you are doing. The key difference is that risk in gambling is never in your favor and you are taking risk for luck. The stock market on the other hand can reduce risk with proper investing research and strategy.

Never invest something you cannot afford to lose. Its one of the old adage I have heard from seasoned veterans and I agree. When you hear of people losing their fortune or savings on the stock market, it is because they become emotional and turned investing into gambling.

If you can can say ‘Yes’ to these, then you can continue considering the stock market.

a. I understand that I can earn from my investments as well as lose. I will not profit from every transaction but my goal is to turn a positive profit from my investments over a period of time.

b. I will invest only a portion of my money.

c. I will spend time to read and research about stock market investing so I will not turn into a gambler.

2. Open an account with a stock broker. 

With the advent of technology, I advise going for an online stock broker so its easier for you to manage your buying and selling. I personally use and suggest CitisecOnline as I find their service mostly reliable.

Requirements for opening an account:

  • Fill up the forms
  • Submit photocopy of valid government issued ID
  • Submit photocopy of any recent billing statement
  • Deposit initial fund of Php 25,000 for a regular account. This will be your fund to trade with.
3. Do your research and reading
  • Your CitisecOnline (COL) account offers market information and investment research for its clients. You may take advantage of that and do some of your reading.
  • Explore the website of PSE and check out stock information
  • Join a forum or two and read up on what people are saying. Be mindful not everything is true and some people “hype” because they could have personal agendas. Most typical is when someone already have a position in a stock, they might “hype” it to entice buyers so the price will go up so they can sell. While these activities are frowned upon by forum mods and can get them banned, it still happens so be careful. The benefit is good though since you tend to pick up more information than you might not otherwise. Suggested forums are Traders Pizza or Finance Manila. A good blog by Gus Cosio is also an advised read.
  • Join a seminar or two to broaden your knowledge. There are seminars by “gurus” and you can learn a thing or two. The seminar fee is worth it and is very cheap if you consider its like taking a class and its better to pay for knowledge rather than lose money in the market because you are unfamiliar.

4. Start Trading

Experience is really the best teacher. So get out there and try it out if this is something you have been meaning to try. Just go conservative at first and don’t invest in something you will stress over. If you cannot eat, sleep or concentrate on your work then you know this is not for you or either you have invested more than you are comfortable with.

The ideal scenario I think is you have a portion of your savings invested but you are ok to follow it once in a while as your schedule permits. Investing in the stock market done properly should not distract you from your day job or your career. Remember, unless you plan to become a full-time stock market investor, protect your day job and career first.

Wow, that is a lengthy article and if this helps at least one person, it is worth my time and effort in writing it. Please do let me know if you are that one person by posting a comment in the blog. Thank you for reading!

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10 thoughts on “Getting Started on the Philippine Stock Exchange

  1. Nice post! Very detailed.I have opened an account in Citiseconline last week and now, I am a proud owner of 10 shares for BDO (Ha! I’ll subscribe more in the future). Cheers to this post again!

  2. Thank your for this article!

    I’ve been working abroad and just opened an account with COL.
    Basically I’m looking at a long term investment, where I just keep on investing/ putting money in 2-3 company max for the next 10-15 years.

    If I opt not to trade during that period, will that be a good decision?

  3. Thank your for this article!

    I’ve been working abroad and just opened an account with COL.
    Basically I’m looking at a long term investment, where I just keep on investing/ putting money in 2-3 company max for the next 10-15 years.

    If I opt not to trade during that period, will that be a good decision???

  4. Hi JR,

    Yes that should be fine. Just invest in Blue Chips companies. Invest in companies that you will be able to hedge your investments in. TEL, ALI, JFC, DMC, MBT, MER are some companies that comes to mind. Alternatively, COL has an EIP program for long-term investments that does not want to trade actively. You can look into that if that fits your investment goals as well.

    Thanks for reading my article.

  5. getting started is the hardest part for me since i have no idea about investing on PSE, but really me and my wife are planning for this for the past 2 years, i really don’t know where and how to start..hope you could help with the idea..

    • Hi Amadao, thanks for taking the time to read my article. If you want to learn to self-manage your funds, the Citisec is the way to go. Open up a trading account with them and attend some seminars they provide as a free service to customers. Join in forums too like stock market pilipinas. http://www.stockmarketpilipinas.com/member.php?action=register&referrer=266

      If you want to just invest in stock market with your extra funds but not worry about managing it, you can join a mutual fund from a reputable company and they can take care of it. For that I can recommend Edel Yu, (0917-5200078) from Sunlife. Tell her I referred you and you prefer the mutual fund only products in case she offers you the mutual fund + life insurance products. If you need life insurance I suggest taking them as separate plans than the combo plans.

  6. @chinne, yes you can! i suggest you go over citisec online, get in touch with financial rep. and about the seminars, you can check youtube ”Pesos and Sense” channel which you’ll learn from there for free.

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