Do you have any idea on how to buy and sell stocks in the Philippine Stock Exchange (PSE)? Maybe you have heard and read the word “PSE” in major news websites and blogs?
In the Philippines, stocks of publicly traded companies are being sold and bought at PSE. It is the sole stock market or exchange in the country. If you want to learn more about PSE, you can visit this post that I have published in the past to give you more knowledge about it.
What is a Stock Exchange?
A stock exchange or stock market is a place of buying and selling stocks of public companies like Jollibee, San Miguel, SM, and Ayala Corporation.What does “public companies” means?
A public company is a corporation that opens its ownership to the public by selling its stocks or shares of the company. On the other hand, a private company is owned only by one person or limited number of people like a family-owned corporation.
Even though you cannot franchise a Jollibee store, the good news is that you can buy its stock or Jollibee shares so you will become a “co-owner” of the biggest food chain company in the Philippines. However, a private individual like you cannot buy stocks of public companies directly to PSE. You must have a stock broker that will act on your behalf, if you want to buy or sell stocks.
In the past, there are only traditional way of trading stocks through licensed stock brokers. A stock broker is a company engaged in buying and selling stocks in PSE. They have the license or authorization from PSE and the Philippine government to do stock trading in behalf of their clients.
Before the introduction of online stock broker, a private investor must call using telephone to his or her stock broker to buy or sell stocks since during that time, Internet is not invented yet or its use is very limited. As a result, few people have the access to investing and trading stocks.
As technology and Internet become more sophisticated, stock trading via the Internet was introduced. Today, there are many online stock brokers in the Philippines offering services of buying and selling stocks through the web allowing more people to easily invest in Philippine Stock Exchange.
How to Buy and Sell Stocks in PSE
First and foremost, investing in stocks involves risk. Your investment is not guaranteed by the stock broker or even the Philippine government. Unlike a bank deposit which is insured by Philippine Deposit Insurance Corporation (PDIC), stock has no guarantee of profit because there are many factors that affect its price.
Thus, it is very important that you understand this scenario. I don’t want to scare you about stock investing, I just want to open your eyes in the reality of investing. Actually, I consider stock investing as one of the best investments in the Philippines if you are eager to learn and patient in understanding and studying how it works.
You may visit the post I published before to learn more about the common terms being used in stocks. So how do you buy and sell stocks in Philippine Stock Exchange? To be able to buy and sell stocks in PSE, you must do the following:
1. Open a Stock Broker Account
Like what I have said earlier, a stock broker acts as your representative when buying and selling stocks. You cannot buy or sell stocks directly to the stock market.
I would suggest to open a stock broker that has online trading capability. The major online stock broker in the Philippines right now are COL Financial (CitisecOnline), BPI Trade, FirstMetroSec, RCBC Securities and Philstocks.
If you will click the links above, it will direct you on the page where you will learn on how to open an account at those stock brokers. The normal procedure would be going to their office with your requirements, ID and documents. The other option when opening an account is by sending all the requirements via registered mail, LBC or Air21.
2. Add Money to Your Account
You need money in order to buy stocks. Normally, most of the stock brokers require P25,000 for the initial deposit of your stock account. In case of CitisecOnline, they offer an Easy Investment Program (EIP) that requires P5,000 initial deposit. You can use that money to buy stocks that you want but it can only buy few shares.
In order to buy more stocks in the future, you must add more money to your stock account. Adding of funds can be done by direct deposit to your account or fund transfer via online banking. In my case, I normally do the latter way since it is easier and faster to do.
When I want to add more money to my stock account, I used BPI online banking to make bills payment to CitisecOnline. The money I added will be credited the same day I made the transaction. When it is already added, I can use it right away to buy stocks that I want.
3. Buy Stock through Your Stock Broker
Since you have enough money to your stock account, you are now ready to purchase stocks of Philippine companies that you are planning to buy. In order to do it, you should log in to your online stock account with your account number and password.
I would suggest to buy stocks of companies included in the Philippine Stock Exchange Index or PSEi because they are the most established companies in the country. These stocks are also the most frequently traded, meaning you can buy or sell these stocks everyday.
Here’s a good video tutorial on how to buy and sell stocks using CitisecOnline, hence, buy and sell stocks in the Philippine Stock Exchange.
4. Invest More and be Patient
After you bought the stocks you want, you must wait until its price go up and hit the target price. Some people use the cost averaging technique wherein they buy stocks on a regular basis regardless of its price.
In my opinion, this is a good strategy if you want to invest in stocks for a long term. At the end, the price of your stocks will fall on the average and you would still make a good profit.
This strategy is ideal for people who don’t want to study the technicalities of the stock market and don’t want to put many hours of study on which stocks will be the best buy. It is not hard to understand but can be difficult to carry out.
Unless you are trader, I would recommend the cost averaging method as the simplest strategy of investing in the Philippine Stock Exchange. Many stock gurus like Bo Sanchez also recommends cost averaging method where you will select 3 to 5 stocks and then invest a certain amount of money each month or quarter.
To Wrap Up
Buying and selling stocks in the Philippine Stock Exchange is one of the best investments available in the Philippines. It is a legitimate investment for people who want to share on the business profit of Philippine and multinational companies.
In order to invest in PSE, you must first open a stock broker account and fund that account with money sufficient to buy the stocks you want. Your stock broker will be your representative in buying and selling stocks in PSE so it is very important that you select the best broker.