How to Invest in the Philippine Stock Market

 

 

 

 

If you’re wondering how to invest in the Philippine stock market, some of the first questions you likely have are how to do it, and how long it will take to open an account. Luckily, when it comes to how long it will take, there’s good news.

If you own a BDO account with online banking, you can submit your application for BDO Nomura in as little as 5 minutes! There’s no question whether it’s difficult to get started and open an account – it’s really very simple. The more difficult questions are, How do you make money investing in stocks? How do you find stocks to buy? And, why should you invest in stocks?

Let’s answer these questions, so you can decide if investing in the Philippines Stock Market is right for you!

 

 

How to make money investing in the stock market?

The first thing you should know about stocks is they are ownership shares of businesses. What in the world does that mean?  Let’s explain.

There are over 200 stocks that trade on the Philippine stock exchange. Each of those stocks has a number of shares. For example:

San Miguel Corporation has over two billion shares of stock! The owners of those two billion shares literally own the company. If you were somehow able to buy ALL two plus billion shares of San Miguel Corporation on the stock market, you would have control of the entire company. Of course, this is nearly impossible, considering how much money it would take, and the number of shares available to buy. But think about it. If you buy as little as one share of San Miguel Corporation, you’re now a part owner of the company.   Yes, it’s a very small part of the company, but you’re still considered an owner when you own as little as one share.  The same is true for all the companies listed on the Philippine Stock Exchange.  

If you want to buy shares of Jollibee, Globe Telecom, SM Prime, etc. you’re an actual part owner of businesses when you buy their shares.  With this ownership comes benefits and risks. If the companies you buy stock in are profitable, their stock price will likely rise over long periods of time.  However, if you buy companies that are not profitable, their stock prices will likely fall over periods of time. This brings us to the two ways you can make money in the stock market.

 

Two ways to earn with stocks

When it comes to stock investing, the first step is buying stock.  Once you own stock, you can profit two different ways:

  1. The price of the stock can increase.
  2. You can be paid a dividend. 

If you buy shares in a company, and the company is profitable, the stock price will likely increase. If the stock price increases, you can then sell the stock on the Philippine Stock Exchange using your BDO Nomura brokerage account. You will receive the money you invested in the stock, plus the growth. Also, if the stock you own pays a dividend, you will receive a dividend while you own the stock.  For example:

If you owned San Miguel Corporation for 10 years, you would have received dividends over that 10-year time period. Those dividends would have been paid to you in cash – you could have reinvested the dividends into more stock, or you could have kept the cash. It’s up to you what you do with your dividends.

Now that we know the two ways we can make money investing in stocks, the next question is. How do we even find stocks to invest in?

 

 

How to find stocks to buy on the Philippine Stock Exchange

There are different strategies when it comes to investing. Some people like to trade stocks over short term periods of time – this can be buying and selling a stock within a day, a week, or a month. Other investors like to buy and hold stocks for long periods of time.  The way you invest will be up to you. Whatever you decide, BDO Nomura provides its investors with top tier research to help you find the best stocks to buy.

 

Using BDO Nomura’s research to find stocks

Every week, BDO Nomura releases a stock coverage report.  This report includes stocks recommended to buy, sell, and hold.  This report is powerful because it can help you find the right stocks to purchase when you’re starting out as an investor. By using the BDO Nomura research reports, you won’t have to do the research yourself – you’ll have access to it on the platform.

Now that you know you can utilize BDO Nomura’s research to find stock, the next question is why you should invest in stocks.

 

 

Why should you invest in stocks?

Stocks are one of the best asset classes to invest in. This makes sense, because, as we learned above, stocks are pieces of businesses. And what are the most profitable asset classes of almost any economy? The businesses that operate in an economy! For example, look at the following charts comparing an investment in the Philippine Stock Exchange Index (this is composed of the largest companies in the Philippines) vs investing the BDO Peso Bond Fund (which invests in government bonds).

 

5 Year Percentage Gain (Dec. 2013 – Dec. 2018)

Philippine Stock Exchange Index (Blue) Vs. BDO Peso Bond Fund (Yellow) 

 

 

As you can see above, if you had invested in the Philippine Stock Exchange Index on December 31, 2013, and held it until December 31, 2018, you would have made a return of just over 26%! But, if you had only invested in the bond fund above during the same period, you would have only made a return of just under 6%. Which would you prefer? And this is true over different periods of time as can be seen below.

 

10 Year Percentage Gain (Dec. 2008 – Dec. 2018) 

Philippine Stock Exchange Index (Blue) Vs. BDO Peso Bond Fund (Yellow) 

 

 

 

13.5 Year Percentage Gain (June 2005 – December 2018)

Philippine Stock Exchange Index (Blue) Vs. BDO Peso Bond Fund (Yellow) 

 

 

As you can see above, if you had invested in the Philippine Stock Exchange over any of the 5 years, 10 years, or 13.5 years above, you would have done FAR better than if you had just invested in bonds. This is why investing in stocks over long periods of time can compound your money at healthy rates of return.

 

 

How much do you need to start investing in the Philippine Stock Exchange?

If you want to invest in the PSE, there’s good news if you open a BDO Nomura account—there’s no minimum! When you open a BDO Nomura account, you can start buying stocks with any amount you add to the account.  Of course, you want to have enough money in your account to buy stocks and pay the trading fees. 

 

What are the fees associated with BDO Nomura?

There are no monthly account fees. The only fees associated with a BDO Nomura account are the fees charged when you buy a stock and when you sell a stock.

 

Fees for buying a stock with BDO Nomura

When you buy a stock, you will be charged the following:

Fee Name Fee Charged on
Securities Clearing Corporation fee  0.010% Gross Amount
Broker’s commission  0.25% Gross Amount
Value Added Tax (VAT)  12% Broker's Commission

 

*It’s important to note the minimum broker’s commission above is 0.25% or PHP 20, whichever is higher.

 

For example:

If you buy PHP 10,000 of stock in a company, the fees will be the following

Fee Name Fee Example: Buying PHP 10,000 Fee
Securities Clearing Corporation fee  0.010% PHP 10,000 x .010% PHP 1.00
Broker’s commission (PHP 20 Minimum) 0.25% PHP 10,000 x .25% PHP 25.00
Value Added Tax (VAT)  12% PHP 25 x 12% PHP 3.00

 

Total Fee to buy PHP 10,000 of stock        PHP 29.00

Net investment after fee                            PHP 10,029.00

 

Fees for selling a stock with BDO Nomura

 

When you sell a stock, you will be charged the following:
 

Fee Name Fee Charged on
Securities Clearing Corporation fee  0.010% Gross Amount
Broker’s commission  0.25% Gross Amount
Value Added Tax (VAT)  12% Broker's Commission
Sales Tax 0.60% Gross Amount

 

* It’s important to note the minimum broker’s commission above is 0.25% or PHP 20, whichever is higher.

 

If you sell PHP 10,000 of stock in a company, the fees will be the following:
 

Fee Name Fee Example: Buying PHP 10,000 Fee
Securities Clearing Corporation fee  0.010% PHP 10,000 x .010% PHP 1.00
Broker’s commission  0.25% PHP 10,000 x .25% PHP 25.00
Value Added Tax (VAT)  12% PHP 25 x 12% PHP 3.00
Sales Tax 0.60% PHP 10,000 x 0.60% PHP 60.00

 

Total Fee plus tax to buy PHP 10,000 of stock         PHP 89.00

Net proceeds                                                        PHP 9,911.00

 

 

How to open a brokerage account to trade stocks on the Philippine Stock Exchange

The first step to begin investing in the Philippine Stock Exchange is to open an account. At BDO Nomura, you can open a brokerage account in as little as five minutes if you have a BDO savings account with online banking.  

If you DO have a BDO account and online banking, you can click here to open a BDO Nomura account: https://www.bdo.com.ph/bdonomura/opening-account

If you DO have a BDO account but DO NOT have online banking, it’s simple to set up. You can set up online banking with BDO here:  BDO Online Banking Setup

If you DON’T have a BDO account, you can go to your local BDO bank and open an account. Once you have an account with BDO and online banking, you can open a BDO Nomura account within five minutes. Of course, there are other brokers you can use to trade stocks but BDO Nomura has the fastest account opening times along with many amazing great features and content to help new investors.

So, what are you waiting for?  

 

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Don’t have a BDO Nomura account?

Click here to open a BDO Nomura brokerage account in as little as 5 minutes!

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