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How to invest in the Philippine stock market




Planning to invest in the Philippine stock market soon? Make sure you understand the basics of stock market investing before you take that plunge!

Don’t worry, we have a short recap and refresher course below, intended primarily for newbie investors who are thinking of taking that first step to become a stock trader or investor!

What are stocks?

stock-trading-tutorialsStocks represent your share of ownership in a corporation. As a stockholder, you are considered a part-owner of the company, which means you have various rights, including the right to vote the members of the board, the right to receive dividends, the right to inspect the books of the company, and the right to take part in the residual distribution of income, among others.

How do I make money from stocks?

There are various ways to profit in stock market investing. The very basic form is capital gains or price appreciation, which is the difference between the current price of a stock and the price you initially bought it. If, for example, years ago you bought a PLDT share for P2,500 and right now it trades at P3,200, the price difference of P700 represents your capital gains from owning the PLDT stock.

Another form of income is dividend. This represents the distribution of earnings of the company to its shareholders. Dividends may be in the form of cash or stock, and if you want to learn more about dividends, read through our Guide on Dividends in Stock Investing.

Another way to earn money in stocks is by receiving stock rights. Stock rights are options given to current shareholders to buy additional shares of the company’s stock at a price lower than the market price. Since the set price is lower than the market price, the shareholder can already sell these stocks in the stock market for instant profits.

How much money do I need to invest in the Philippine stock market?

The simple answer to this question is that it depends on the minimum amount needed to open an account with your stockbroker. You cannot buy and sell PSE stocks without a broker, so that means you need to open a trading account with them to start participating in the stock market.

At present, some brokers merely require P5,000 to open an account with them. Check out our comparison of online stock brokers in the Philippines to see the minimum required investment, broker’s commission fee, and contact information per broker.

Actual trades must follow the Board Lot. The PSE Board Lot table shows the minimum number of shares that can be bought or sold for a given stock and the minimum price increment required for each trade. Here’s a guide on How to use the PSE Board Lot table.

Where do I find a stock broker?

In the Philippines, there are dozens of active and duly licensed stock brokerage firms. Want to see which ones are preferred by PinoyMoneyTalk members? Here are the results of a poll asking about the best online stockbrokers in the Philippines.

Do I need to pay income taxes when I invest in stocks?

When you make a buy or sell transaction in the PSE, you are automatically charged VAT and stock transaction taxes for every completed trade. That means there is no need anymore to pay separate income tax or capital gains tax for your stock investments. For more information about the fees and taxes paid when buying and selling stocks, click this link.

How much should stock prices rise so that I’ll earn a gain despite the fees?

There are fees and taxes charged to you whenever you buy or sell stocks so make sure you consider them when computing the right price to sell your stock. The so-called “breakeven point” or the ideal price increase percentage will actually depend on the broker’s commission fee.

But for a sample 0.25% broker’s commission, the stock price should increase at least 1.09% so that you can break even considering the costs and fees charged to you. (See sample computation of fees charged in PSE transactions.)

After selling my stocks, when can I receive the cash proceeds?

Cash proceeds from sales of stocks are usually credited to your account after three (3) working days. Some brokers, however, allow you to make new buy trades using those proceeds without the need for clearing. If you wish to withdraw the funds from your account, though, you have to wait 3 days before the cash is credited to your account so that you can request for a withdrawal.

Are stock investments guaranteed?

No, stocks are not covered by the Philippine Deposit Insurance Corp. (PDIC) and brokers make no guarantee that you will earn money from stock trading. Do note that it is possible to lose money in the stock market.

I need more information about how to invest in the Philippine stock market.

Don’t worry, you can refer to:

***¬†PinoyMoneyTalk’s FREE¬†Stocks Tutorial and Guide or

*** PMT Forum’s tock Trading forum discussion

Happy smart investing!

(See also: FREE Stock Target Prices and Brokers’ Recommendations)


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About this post: are philippine stocks tax free, cgt to stock philippine stock exchange, difference between Philippine stock market and world market, how much capital is needed to invest in phil stock market, how to invest in pldt stock market

4 thoughts on “How to invest in the Philippine stock market”

  1. billyramirez03 says:

    Good read especially for newbies like us. To add, you can read my 15 stock terminologies a beginner should know here: http://www.thinkpesos.com/15-stock-market-terminologies-a-beginner-should-know/

  2. Make Happy Money says:

    Very informative. Here is the complete list of accredited online trading brokers in the Philippines http://bit.ly/1NN8lke

  3. Justine Emmanuel Relano says:

    Mas magandang mag join ka nalang dito sa popular communty, Kung nagbigay ka dito ang pwede mo naman hingiin sa community is 30% na binigay mo kasama rin ung binigay mo, so meaning 30% monthly ang pwede mo hingiin :)

    Sa Community na ito ang goal dito ay sirain ang financial system na nakasanayan na tulad sa bangko na napakaliit ng binibigay sa mga depositors!

    Let me give a example kung paano pinapatakbo/kumikita ang bank using thin Air. Sabihin na natin na si Mr. Janson ang Bangko. at si Mike at Angelica ang Depsoitors. Ngayon Si Mike ay may nagustuhan na bike worth 2000 Pesos at ang bike shop na iyon ay kay Angelica. Ngayon si Mike ay may 200 pesos lang sa kanyang bulsa at sinabi nya kay angelica na pauna nya muna ung 200 pesos wag nya lang ibenta sa iba at nag OO naman si Angelica. At Si Angelica ay pupunta sya sa Bank para mag deposit ng 200 pesos para sa savings nya. Ngayon naman si Mike ay nag-iisip kung saan sya kukuha ng 1,800 pesos para mabili at makuha na nya ung bike na gustong gusto nya at ang naiisip nya ay pupunta sya kay Mr. Janson “the bank” at hihiram sya ng pera na 1,800 pesos pero sabi ni Mr. Janson ay 200 pesos lang muna ang pwede nya ipahiram then after 3 days balik ka dito. Ok so nakahiram si Mike ng 200 pesos at agad naman nya na ibinayad kay Angelica. at si Angelica deniposit ulit nya sa banko nya ung 200 pesos then after 3 days ulit pumunta ulit si Mike sa bangko at binigyan nanaman sya ni Mr. Janson ng 200 pesos. Hanggang mabuo nya ang 1,800 pesos. The same Scenario lang ang mangyayari. So ngayon nabili na ni Mike ang pinaka-gugusto nyang bike na worth 2000 pesos pero naka utang sya kay Mr. Janson “the Bank” at si Angelica naman ay kumita na ng 2000 Pesos na halaga ng bike. So sino ang tuwang tuwa ngayon syempre lahat sila kasi nabili ni Mike ung gusto nya, si Angelica naman nabenta nya ung tinda nyang bike at si Mr Janson “the Bank”. Pero sa katunayan si Mr. Janson ang pinaka natuwa kasi kumita sya ng pera using Thin Air! So meaning kumita sya ng walang nilabas na pera! Dahil nagkautang si Mike ng 1,800 pesos plus interest pa sa kanya kung kailan nya babayaran. So makikita nyu na ang bangko ang lalong yumayaman hindi ang depositors dahil ginagamit ang pera nyu para sa ikakayaman pa nila lalo!

    Kaya sa mga gustong masubukan ang “Power Of Giving” Kung tumulong ka, ikaw ay tutulungan rin. Dito sa Financial Community ikaw makaka-hingi ng 30% monthly sa binigay mong pera malayong malayo sa Time Deposit.

    Ok I will give an Example. Let say you provide help an amount 100,000 pesos in 1 month you can get help an amount of 130,000 pesos. Full principal back. Mahirap man paniwalaan pero kung d mo susubukan hindi mo malalaman. BUT THIS IS NOT A HYIP!

    This is a community of ordinary people, selflessly helping each other, a kind of the Global Fund of mutual aid. This is the first sprout of something new in the modern soulless and ruthless world of greed and hard cash. The goal here is not the money. The goal is to destroy the world’s unjust financial system.

    Minimum Provide Help: 200 pesos

    Maximum Provide Help: 400,000 pesos

    If you want to join

    Register your free account here: http://bit.ly/FillupFormHere

    Join our group here: http://bit.ly/joinourfacebookgrouphere

    Add me in Facebook: https://www.facebook.com/justinerelano

    Message/Call me here: +639275727706

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