People invest in stocks for a variety of reasons — some people wish to diversify their investment portfolio, some buy stocks as a source of passive income, while others want quick profits.
Previously, the cliché of stock investors were executives in their 50s to 60s earning a good salary and possessing millions of pesos for investment. However, times have changed.
According to the Philippine Stock Exchange's (PSE) 2018 Stock Market Investor Profile study, around two-thirds of individuals who invest in equities today are youthful investors, with the majority (43.1%) being between the ages of 30 and 44. Millennial investors between the ages of 18 and 29 are also on the rise, accounting for 21.5% of total accountholders in 2018, up from 16.2% in 2017.
When it comes to starting an investment account, more and more Filipinos understand the value of starting early. Although stock investing may appear hard, it is simple to enroll and begin investing. In fact, it's the best first-time investment for beginning investors.
There's no better time than now to start, but don't jump in without first learning the fundamentals. If you're a beginner looking to turn your savings into investments, you've come to the perfect place. Get a jump start with basic investment advice in the comforts of your Vista Residences condominium and start investing stocks online afterwards.
What are stocks?
Shares of ownership in a company are represented by stocks. Stocks are purchased and sold on the stock market. People purchase and sell stocks in order to gain from a company's enormous long-term value potential. You become a shareholder or a part owner of the company after you purchase or invest in stock.
What is the stock market?
The stock market is where investors can buy and sell equities. Companies that require funding for company expansion may sell a portion of their ownership to the public (also known as stocks or shares).
Our local stock market is governed by a corporation called the Philippine Stock Exchange (PSE). It was founded in 1927 as the Manila Stock Exchange, and is one of Asia's oldest stock exchanges.
How do you make money with stocks?
As a shareholder, you can take part in the company's expansion, receive dividends and benefit from rising stock prices.
The market price of your stock portfolio will rise over time due to a growth in its potential value and the demand for its shares, which is known as capital or price appreciation. A company's stock will rise more quickly the faster it can expand.
Profitable companies may also give dividends to shareholders as a way for them to partake in their distributed earnings, whether in the form of cash or more shares of stock.
Who can invest in stocks?
The Philippine Stock Exchange is open to all Filipinos (including OFWs) and foreigners aged 18 and over.
Minors or children under the age of 18 may invest in a brokerage account through an In Trust For (ITF) account registered for them by their parent or guardian. In this situation, stock investing is great for accumulating funds for a child's college education.
Do you need a lot of money to invest in stocks?
To be able to invest in stock funds, you don't necessarily need to make a high income. According to the PSE Stock Market Investor Profile report, the majority of investors in 2018 make less than PHP 500,000 annually (or less than PHP 41,666.67 each month).
Starting a stock investment costs as little as PHP 5,000, as long as you have enough money in your savings account to buy stocks and cover the trading fees. Some stockbrokers don't have a minimum requirement.
How to find stocks to buy on the PSE?
There are several strategies on stock market investing. Short-term stock trading might involve buying and selling a stock within a day, a week, or a month for some people. Other investors may prefer to purchase stocks and hold them for extended periods of time. You will be able to choose how you invest.
If you want to practice growing your online brokerage account without having to lose money, you can use stock market simulators that are available on your mobile phones and other devices.
Why start investing in stocks?
Stock investments can yield higher returns than other investments. Here are the three most important reasons to start buying stocks.
1. Capital Gains
When you possess a company's stock, you can profit from an increase in the stock's market price. You acquire the stock at a low price and then sell it at a higher price later.
For instance, if you buy 100 shares at PHP 10 per share and sell them a year later at PHP 20, you will receive a 100% return on investment (ROI), or PHP 2,000 on the 100 shares.
As a result, buying stock is suitable for long-term financial goals, like retirement savings. The earlier you begin, the greater your profits will be.
2. Dividend Payout
Most PSE-listed companies give a percentage of their earnings to shareholders in the form of cash dividends or free additional shares of stock. Dividends are usually paid out once or twice a year to stock investors.
For example, if a firm declares a cash dividend of PHP 0.35 per share, a stockholder who owns 10,000 shares will get PHP 3,150 (PHP 0.35 x 10,000 minus 10% withholding tax). The cash dividend can be withdrawn or reinvested by the investor.
A stockholder with 10,000 shares will get an additional 3,000 shares of stock if a corporation declares a 30% stock dividend. After they are issued, the investor can sell shares.
3. Part-Ownership Rights in a Company
Being a stockholder in a corporation entitles you to vote in the election of the Board of Directors at the corporation's annual stockholders' meeting. When the company closes, stockholders receive a portion of its residual assets.
Do I need a financial advisor?
A financial advisor's duties extend beyond simply trade stocks for their clients in the market. Financial advisors provide individual financial plans that are designed to help clients reach their investment goals using their knowledge and experience.
Furthermore, you can also access a digital financial advisor, sometimes known as a robo-advisor. Based on your responses to questions about your investing goals and risk tolerance, a robo-advisors utilizes computer algorithms to manage your finances. You may be able to save money and time by using these services.
What are the 4 golden rules of investing?
Understanding and adopting these four essential rules of thumb to keep you on track will help you have the right investment strategy.
1. Be early.
Investing in stocks early means taking advantage of compounding over a greater period of time.
2. Do it regularly.
Rather than investing all at once, consistently add the same amount to your investment each year. Take a look at how much of a difference this can make to your portfolio. The secret is to consistently add to your investment accounts through compounding.
3. Think long term.
Short-term volatility is a problem that can be solved through long-term investing. Occasionally, factors that are related to the economy, politics, or the weather may arise and cause price fluctuations.
4. Try to diversify.
Your investing style should always be accompanied by effective risk management. Spreading assets out and away from one specific asset class or by investing in different stocks is one strategy to reduce risk.
Additionally, evenly distribute your wealth and maintain a healthy balance in your investments by looking at options, including mutual funds, real estate, and cryptocurrencies, among others.
Stocks and real estate are two of the most popular ways to invest and develop your money. If you're planning to invest on the latter, you might want to have a look at the numerous ready for occupation and pre-selling condominium projects of the top real estate developer, Vista Residences.
