Investing in the stock market is scary for a lot of people. Others like Warren Buffet love it and end up making a lot of money in the process. But everyone who wants to be rich through the stock market needs to know some basic things.
Here are the 3 easy steps I followed in getting started on how to invest in the Philippine Stock Market.
Step 1: Open a stock brokerage account.
To begin investing in the stock market, you have to have a broker. As for my case, I used an online stock brokerage firm in the Philippines, mainly because of the convenience of doing it all online, at the same time, taking advantage of the relatively lower fees.
A few months ago, my wife and I opened an online stock brokerage account with CitisecOnline.com. It was after many many months of thinking about it. I already wanted to open an account even when I was still in Malaysia but I always found an excuse not to do it. I’d say, it’s hard to open an account since I’m out of the country-Philippines. But the reality is, I can actually fax or mail the application forms to Citiseconline if I really wanted to and they’d be able to open the account for me.
I came across CitisecOnline.com again when I attended Bo Sanchez’s Truly Rich Financial Coaching Program after coming home to the Philippines last year. I got to know more about the company and the stock market in the Philippines. I was pretty convinced this was something I wanted to get involved into so I picked-up the application forms and brought it home with me. However, taking action on the investment opportunity is a totally different story. The only thing I had to show for it after a few weeks is the unfilled and un-submitted application forms on my hands.
Getting frustrated with myself for taking a long long time to decide, I finally filled-up the forms and decided to mail it to CitisecOnline.com the next day. My wife, being the thoughtful person that she is, tried to call up CitisecOnline.com to inquire how we can submit our application forms. She was pleasantly surprised because CitisecOnline.com offered to pick up the forms for us. It meant we didn’t have to pay for mailing the forms ourselves after all! So far, so good. 🙂
Step 2: Activate and fund your brokerage account
The CitisecOnline.com agent came to our office that same afternoon to pick up the forms. He took a quick look at the forms to make sure everything was filled out properly. After confirming that everything is in order, he smiled and thanked us as he went on his way to file our application forms.
The application process went on smoothly and after a day we got an email and a call from the COL agent that our application has already been approved and ready for funding.
Normally, COL requires a minimum amount of P25,000 to fund an account. For CitisecOnline Easy Investment Program (COL EIP), however, you can open an account for as little as P5,000 minimum.
We decided to fund our account with P5,000 first. We went through the nearby BPI branch and deposited the amount to CitisecOnline account number provided to us by the COL agent. Afterwards, we then faxed the receipt to the agent and waited for our account to be activated.
After a few days, COL advised us through phone that our account has been activated and our the login name and password have been sent to our registered email address.
Here’s where I encountered a few problems. The email containing the password was tagged as a spam. Since the email client I was using then was very old, I went through a lot of trouble trying to un-tag it so I can read the password. With no luck, I requested COL to re-generate the password again. Unfortunately, the new email containing the re-generated password got tagged as a spam too. Back to square one.
Starting to get frustrated, I then requested to have my email address changed. The COL agent sent the application form for changing my email address. I quickly filled up the form and faxed it to COL.
Eager to check my account, I waited for their reply everyday, expecting that they generate the new password to my new email address. But after a week, there was still no response. This time, I sent an email to follow-up and shared my frustration.
That same day, I received my login and password via email and was able to view my COL account online.
Now, we’re getting somewhere! 🙂
Step 3: Buy stocks using your brokerage account
After reading the book Rule #1 Investing by Phil Town, I learned that the basic idea of investing is buying a $1 worth of stock for half the price-$0.50. But calculating the value of a stock is not a very straight forward process, and to some degree, it is more of a guess than anything else.
I tried to calculate the value but it took a lot of effort digging up historical data. Fortunately, CitisecOnline provides about 3 years worth of a company’s financial performance but it’s just not enough. Looking at the negative growth rates in 2008, when stocks and businesses were hit by recession, it is even harder to make a reasonably accurate guess of the company’s future.
At this point, I had a dilemma. I realized I needed to learn more. However, until I have some money actually invested in stocks, I would not be able to learn through experience. This meant I had to invest another way, for now.
Enter COL Easy Investment Program (EIP). The program takes advantage of the Cost Averaging method of investment. The idea is to invest a fixed amount of money on a regular basis (weekly, monthly or quarterly) on premium growth stocks and take advantage of the power of compounding to grow your money in the long term.
Since your investing the same amount every week/month/quarter, your money will buy more shares when the market is down. If the market is up, the value of your shares will also go up. So in essence, you’re making money both ways. The only disadvantage is that you have to have the discipline to invest the same amount on a regular basis and leave your money for the long term (COL suggests at least 5 years) and not get carried away by your emotions.
For those investing through COL EIP, you can even choose to invest on the recommended companies/stocks listed on the COL site.
Here are the 3 main advantages of using the COL EIP method of investment.
- You don’t have to worry about constantly watching the stock market.
- For as low as P5,000, you can invest on solid growth companies.
- Simple to use, regardless of age, income, or investing experience.
To gain valuable learning experience, I figured this is a great way for me to start investing in the stock market. Without the necessary experience, I won’t have the knowledge to properly analyze a company and I won’t be able to make an educated assessment of the value of the stocks I want to invest in.
Besides, the Philippine stock market only has a limited number of companies at the moment, so I might as well invest in the most stable of companies for now, those that I think will still be in business for the next 10 years.
I know that P5,000 is a very small amount for some people. However, it is an amount I’m comfortable
investing in into the stock market. I may decide to invest more in the future as I gain experience in learning the world of stock market investing, but for now, I’ll stick to investing at least this amount on a regular basis.
How about you? Have you started investing in the Philippine stock market? How’s your investing experience been so far?