This article describes the 3 tips on how to do online stock market investing in the Philippines. This is part 2 of a 3-part series on the lessons I’ve learned from the recent Money Summit and Wealth Expo. If you missed the first part, you can read the real-estate investing tips in the Philippines here.
Online Stock Market Investing in the Philippines
It’s been months since I’ve started online stock market investing. As I’ve shared in my 2010 Financial Goals Mid-Year Update, investing in stocks has been an eye opener for me. This is the reason why I was so glad to learn more about online investing in the stock market during the Money Summit and Wealth Expo seminar.
Lesson #1 – Investing in the Stock Market Requires Discipline
According to Conrado Bate of CitisecOnline, Inc. (COL), one way to successfully invest in the Philippine Stock Market is to invest continuously and regularly on good quality companies with predictable earnings. This investing method is known as cost-averaging.
That means, you need to invest a fixed amount of money every month (or quarterly) regardless if the market is up or down. If the market is down, your money buys more shares of the company. If the market is up, your total investment would also go up in value. So even if the market is up or down, over the long term, your investment will still yield a pretty good return.
This is a pretty simple strategy. But it is NOT easy. For one, you have to have the discipline to buy the stocks even if the price is too high and still buy the same stocks even if the price is too low. Your tendency is to get greedy when the price is too high, and become afraid when the same stock is priced way too low.
Personally, this has been my experience. The reality is I am an emotional being and I too am driven by 2 emotions – greed and fear. For example, initially I planned to invest monthly through EIP but my over excitement has gotten the best of me. When I bought my first stocks, I was so excited, I bought 3 different stocks right away. Then I learned about the Super EIP and realized some stocks are being sold 47% below their price. So I bought some of those stocks too. That’s greed in action.
With so many stocks in my portfolio, I don’t have enough money to invest in each of them every month now. In addition, the price of some of my stocks is down 5% (ouch). Worse, I don’t know what to do (fear). Should I buy more of this stock now that it is priced lower? How about those stocks I own that are now 30% up? Should I sell them now?
Sometimes, answering these questions is not always easy. In times like these, having the discipline to stick to your plan will come in handy.
Lesson #2 – Invest Only What You Save, Not What You Need
One very useful advice from a COL agent (I can’t remember her name) during the seminar, was to invest only what you save, not what you need. The stock market is subject to market fluctuations. You have no control over how the price will go. This is the reason why some investors advice on investing only what you save (or what you can lose), and not what you need.
You should NOT borrow money to invest in the stock market especially if you’re a beginning investor. Save first. Unless you have the discipline to save, you won’t have the discipline to invest.
Don’t invest what you need. Money spent for your needs should NOT be invested into the stock market. Never use money from your emergency fund. Never invest the money you are using to pay for your debts. The stock market is risky precisely because you don’t have any control over the investment.
With consistent saving and investing, your small amounts can become big amounts over the long term through the power of compounding. Your money is leveraging the consistent growth of the company and the power of compounding to give you a nice return in the future.
Lesson #3 – Don’t Watch The Market
One very good habit that I’ve realized recently, is NOT to track your investments on a daily basis. This may sound contrarian. Maybe it is. Maybe for some they need to watch the market daily. But personally, I have not found a very good reason to track my investments on a daily basis.
I do track my investments every now and then, maybe once or twice every month. But it has never come to a point where I would have to watch over it on a daily basis.
This is both to make the most of my time as well as for my own sanity. I cannot imagine myself being glued to the screen monitor tracking the stock price every minute and then and worrying about the problems of the world such as the European debt crisis, oil problems, election results or what not.
I understand that my money will be able to work for me over the long term, only if I give it time and stick to my strategy. I am not investing all of my money in the stock market. Stocks is only a small portion of my investment portfolio at the moment. Besides, I don’t invest what I need. I invest only what I can lose. That simple thought helps me sleep at night.
Readers, what other stock investing tips can you share? do you think cost-averaging method actually works?
Hi! Thanks for this post. I printed this and asked my parents to read; I shared also your link to them.
Mr. Allan, Am I right to assume that I can only trade from 9am to 12nn Philippine time? You see, I’m somewhere in the Middle East and 9am Philippine time is only 4am here. I find it quite difficult to trade in CitiSeconline because of this time difference.
Thanks for this post! This is very timely because hubby’s application for citiseconline has been approved. We are now busying ourselves reading and learning things about investing.
@Jezz, that’s very kind of you. As for your question, I haven’t bought stocks outside of the trading hours, but based on the COL site’s FAQs, it looks like they allow you to buy stocks off hours. There are 2 types of orders like this: Off-hours At-the-Open (ATO) Order and An At-the-Close (ATC) Order. I’m going to try it one of these days and will probably do another article to describe how it turns out. Watch out for that.
@Lei, that’s great to hear! Good luck on your investing journey!
I will look forward to that article Sir! Thanks.
Interestingly… Almost every pinoy finance blog I visited lately have new posts about stocks! And I’m an absolute noob talking about my first book. Lolz!
Anyway, some pickup lines from your article…
“You should NOT borrow money to invest in the stock market especially if you’re a beginning investor. Save first. Unless you have the discipline to save, you won’t have the discipline to invest.”
Good thing you said this… I was thinking of about this for a long time!
What are the criteria of the stocks that would you recommend? I mean how would i choose specific stocks/shares to buy? what would be the things too look for? Any organizations or investment stock training center which you could suggest and credible that we can attend to.. “Training center that “Walk the Talk”. 🙂
Hope this is not too much for you? 🙂 Do you have a top 20 dividends paying blue-chip company in the Philippines?
It seems you are savvy on this topic. What stocks or investment would you suggest?
I will treat for a lunch or dinner. 🙂
I believe the COL agent’s name was Eleanor. I was so impressed by how much she was able to increase the value of her portfolio. ^^ bow ako sa kanya.
Modern Portfolio Theory suggests that 100 – (your age) should be the amount in percent of your available funds that you should invest in the stock market. This is based on the premise that the younger you are, the more time you have to stay in the market, and historically, the market has given positive results over long periods of time. (The logic is sound but for someone who’s 30, putting 70% of your money in stocks can be scary as well. hehehe ^^)
@Randy, apologies for responding to you just now as I’ve been quite busy lately. I believe COL offers FREE seminars on stock investing. You can give them a call for the seminar schedule. If I am not mistaken, their agents actually invest in the stock market themselves, so they might actually qualify for the “walk the talk” part. You can also ask the one giving the seminar what specific stocks he/she has bought and included in his/her portfolio. If you get lucky, he might just share them with you along with the reasons why he chose those stocks in the first place. Choosing a specific stocks/companies requires a whole different area of discussion which I am also still learning myself. I will definitely share with you and the readers of this blog as soon as I learn something valuable. Good luck on your stock investing! God bless.
@Money Magnets, thanks for sharing her name. I think the reason behind the suggestion is basically that the younger you are, the more time you have to get back on your feet in case you lose money. The thought of which, can really be scary. =)
Thanks Allan for sharing these information.
Me and my friends have been exchanging ideas and analysis of various PSE listed companies. As always the very first advice for newbie stock investors is to put only your free cash. If you are interested in investing in stock the very first thing you have to do is to divide whatever money you have now into emergency fund, your daily expense fund, your retirement fund, your tithe, and your investment fund.
Allocate according to your needs and whatever is only free and available should be put into stock investments.
venturing into stocks can be either via trading or investing. Investing is more of a long term while trading is for short term which most investor term it “tsupita”.
I totally agree with you Louis. I think it all comes down to why you want to invest in stocks, whether you want to invest for the long term or just trade stocks in the short term. And yes, it is certainly prudent to invest only the cash that you can lose. You have to take care of your necessities first — daily expenses, emergency fund, etc.
oh y the way online stock trading is the recommended brokerage account to start because they require minimum investment and are easily access. If you have a Metrobank account you can open an with there online brokerage arm First Metro Securities. Yo can link your Metrobank bank account to your First Metro Sec account easily. If you have a BPI account you can also open at BPI Trade.
You can start buying and selling with your First metro sec account at a minimum capital of 2,000.00 pesos only without any maintaining balance. That means they require your account to only have 2,000.00 for you to start buying stocks.
Thanks Louis for sharing. I’m sure some of our readers who have Metrobank accounts will find it useful. I haven’t tried it but it’s always good to have more options. Lower minimum capital is certainly a plus.
Quite new here but I’m excited to read the first issue of rich money habits.Thanks.
Hi Allan, I really appreciate your web page. it’s very helpful for filipinos like us to impart or share their experience or information about stock investing.
I’m not sure what is COL as I haven’t heard that. I will try to find it on google.
I credit much of the motivation I got with regards to investing in the stock market. You were very good in presenting the pros and con especially for newbies. Now I have evolved from an investor to an aspiring trader. Not that I’m really active or good but I sure like to hear the rumors and once backed with the fundamentals, I would try and play a bit. haha
Me and some of my friends formed a group wherein we share our thoughts and ideas, latest news, fearless forecasts, and hopefully a forum soon, about stock market investing and trading. We’re not necessarily the great guys but we believe in the power of we. We could be reached through TradersDelight.net – network of stock market investors, traders, enthusiasts, hobbyists, etc. Masaya kasi there’s this something I would always look forwards into doing each and every day. Just like you, gusto din naman matulungan ang iba nating kababayan to learn more about the potentials of stock investing. Salamat ulit sa walang sawang pagsusulat para mahikayat din ang mga takot mag-invest. Again, it’s not for the rich people, it’s for the people who want to walk in the paths of financial freedom.
Thanks Jonha for your kind words. Checked out the site you mentioned. Looks promising! Good luck!
Hi there. I really love your blogs, especially now that I am planning to revive my account with Citisec which had been sleeping for quite a while now, hehe (Can’t even get the password right). I would definitely venture first into those long term investments and not (yet) trading as I’ve lost (and earned little)money before. I am still in the process of updating my knowledge regarding the stock market today. Hopefully I can already decide which stocks to invest and maintain (or whatever mix is better to maintain at regular periods). Keep the information coming because it is really very much appreciated especially by those people who, like you, worked abroad and is looking for a concrete way to see their money grow. Thank you very much! 🙂
Thank you very much Edelvise for your kind words and encouragement. It means a lot. I hope to bring you more interesting articles in the future.
Me likey this article *very* much.
I like how something that’s rocket science to me is explained like this. If you don’t mind i’ll link to this so I don’t forget it anytime soon.
The reality is that it doesn’t matter if you are investing in the real estate market, gold, stocks, art, or antique cars; the best way to protect your wealth is not to put all your eggs into one basket.
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A friendly reminder to everyone who wish to invest/trade in the stock market or forex online. Don’t dare to trade when you don’t have sufficient knowledge about the forex/stock market psychology. Otherwise, your investing is nothing but a gambling! You can’t afford to lose your hard earned money in a split second, can you? For newbie, the best practice is LONG TERM INVESTMENT to ensure the maximum potential growth of your money. The least is 5 years or 10 or 15 years or more… Make stock market as your biggest piggy bank. You can invest for as low as PHP 2,000/month faithfully. You will be amazed in due time that this becomes millions. In this way, the risk is minimized but the profit is maximized. If you want to have a mentor who would teach you step by step on stock market investment, may I recommend you the truly rich club of Bro. Bo. Sanchez. Promise you won’t regret. Happy investing!
Guys, if you are interested in stock investing you could visit the PSE academy website. It is a smart start to investing.
PSE Academy, the official market education website of the Philippine Stock Exchange, Inc. (PSE) created in partnership with the PSE Foundation, Inc. It is designed to provide a comprehensive investor web-based education for market participants, would-be equity investors, and the public in general.
Sir I am interested to invest in the stock market.
Can you help me out? Information regarding figures would be better. looking forward for your reply.
hello joshua, if you’re keen on getting the figures, you can get it from CitisecOnline research data thru their website. Or if you want a more user friendly version, I recommend subscribing to Bo Sanchez’ Truly Rich club to receive the monthly stocks updates.
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