Last time I've already discussed the definition of stocks and the essential rights of a shareholder. For the previous post please click here, Stocks 101: The Basic Part 1.
Note that whenever I mention stocks, I am referring to common stocks only. I will not be touching about the preferred stocks since I'm not investing on it and only a few small time investors have it.
The Stock Market is the place where people can buy and sell stocks. However, you cannot simply march inside the Philippine Stock Market office and demand for acquisition of stocks. You need to have a broker which are the legal middleman in stocks transaction.
Stock Broker
There are 2 types of dealing with your broker, the offline broker and the online broker.
The offline broker are the traditional or old school type wherein you can do transaction over the phone or by visiting the broker's office personally. The cost of transaction for this type is high and so is often use only by big time and institutional investors. The advantage of using an offline broker is you can get some tips and advise from your broker (but this can be a disadvantage as well if your broker is trying to sell promotional stocks...I'll touch on this issue some other time).
The online broker is the latest and modern way to buy stocks. You first open an online trading account from the brokerage company, then you can have an access to a trading platform wherein you can do buy/sell of stocks over the internet. It is quick, fast, and cost effective way to buy and sell stocks. However, using this platform, you need to do all the stock picking on your own.
In the Philippines there are 3 major online platform that I know:
Citiseconline
BPI Trade - under Bank of the Philippine Islands
First Metro Securities Brokerage Corporation - under Metrobank group
In my case, I'm using the BPI Trade platform because of its convenience. It is tied up to my BPI savings account. This account is where I remit my money to the Philippines, transfer funds to my parents for their allowance, pay bills, withdraw cash in the Philippines and abroad, it is linked to my ALFM funds. And the best part is you can open the BPI Trade Account at PhP500 only! Yes, so for you guys out there saying that stocks are only for the rich kids, well you're wrong!
Note that I'm not endorsing the BPI Trade Account or its services but I'm just speaking about my experiences. I'm not sure about the requirements needed for the other platform but you can search on your own by clicking on the link above. For Citiseconline, you can also check this blog post from one my favorite blog: http://learnfinancialeducation.com/how-to-open-a-citiseconline-stock-trading-account/.
Stock Market Vocabulary
I also found the blog below to be very informative about the words/jargons use in the stock market:
http://learnfinancialeducation.com/common-terms-in-stock-market/
You might as well visit the Philippine Stock Exchange website for more information at
http://www.pse.com.ph/
How Much Money Do You Need To Start Trading?
It depends on the brokerage company/platform that you choose. As I have mentioned, I have choose BPI Trade because it requires the least amount of money to open an account which is PhP500. Of course you need to first have a BPI Savings Account. The BPI Direct Savings Account only requires PhP500 initial deposit as well.
Depending on the company/stocks that you wish to buy, the minimum amount of money that you need to start trading will range from PhP 1,000+ to PhP10,000++. For example, FLI or Filinvest Land Inc, you can buy 1000 shares of FLI at PhP 1,122.65 based on last Friday closing price (Mar. 18, 2011)!!! I wish I have learned this things a long time ago, because I use to believe that investment in stocks will require huge capital.
But just a friendly advice, if you have sufficient money, do all your transaction (buying and selling) at minimum of PhP8,100 or less to save on transaction cost. Why? Because there's a fix minimum transaction and anything lower than this will increase the ratio of your transaction expenses to total investment amount. I will explain this on my next post.
For the meantime, keep reading and learning about investment because that is the first step in Smart Investing and Wealth Accumulation.
Note that whenever I mention stocks, I am referring to common stocks only. I will not be touching about the preferred stocks since I'm not investing on it and only a few small time investors have it.
The Stock Market is the place where people can buy and sell stocks. However, you cannot simply march inside the Philippine Stock Market office and demand for acquisition of stocks. You need to have a broker which are the legal middleman in stocks transaction.
Stock Broker
There are 2 types of dealing with your broker, the offline broker and the online broker.
The offline broker are the traditional or old school type wherein you can do transaction over the phone or by visiting the broker's office personally. The cost of transaction for this type is high and so is often use only by big time and institutional investors. The advantage of using an offline broker is you can get some tips and advise from your broker (but this can be a disadvantage as well if your broker is trying to sell promotional stocks...I'll touch on this issue some other time).
The online broker is the latest and modern way to buy stocks. You first open an online trading account from the brokerage company, then you can have an access to a trading platform wherein you can do buy/sell of stocks over the internet. It is quick, fast, and cost effective way to buy and sell stocks. However, using this platform, you need to do all the stock picking on your own.
In the Philippines there are 3 major online platform that I know:
Citiseconline
BPI Trade - under Bank of the Philippine Islands
First Metro Securities Brokerage Corporation - under Metrobank group
In my case, I'm using the BPI Trade platform because of its convenience. It is tied up to my BPI savings account. This account is where I remit my money to the Philippines, transfer funds to my parents for their allowance, pay bills, withdraw cash in the Philippines and abroad, it is linked to my ALFM funds. And the best part is you can open the BPI Trade Account at PhP500 only! Yes, so for you guys out there saying that stocks are only for the rich kids, well you're wrong!
Note that I'm not endorsing the BPI Trade Account or its services but I'm just speaking about my experiences. I'm not sure about the requirements needed for the other platform but you can search on your own by clicking on the link above. For Citiseconline, you can also check this blog post from one my favorite blog: http://learnfinancialeducation.com/how-to-open-a-citiseconline-stock-trading-account/.
Stock Market Vocabulary
I also found the blog below to be very informative about the words/jargons use in the stock market:
http://learnfinancialeducation.com/common-terms-in-stock-market/
You might as well visit the Philippine Stock Exchange website for more information at
http://www.pse.com.ph/
How Much Money Do You Need To Start Trading?
It depends on the brokerage company/platform that you choose. As I have mentioned, I have choose BPI Trade because it requires the least amount of money to open an account which is PhP500. Of course you need to first have a BPI Savings Account. The BPI Direct Savings Account only requires PhP500 initial deposit as well.
Depending on the company/stocks that you wish to buy, the minimum amount of money that you need to start trading will range from PhP 1,000+ to PhP10,000++. For example, FLI or Filinvest Land Inc, you can buy 1000 shares of FLI at PhP 1,122.65 based on last Friday closing price (Mar. 18, 2011)!!! I wish I have learned this things a long time ago, because I use to believe that investment in stocks will require huge capital.
But just a friendly advice, if you have sufficient money, do all your transaction (buying and selling) at minimum of PhP8,100 or less to save on transaction cost. Why? Because there's a fix minimum transaction and anything lower than this will increase the ratio of your transaction expenses to total investment amount. I will explain this on my next post.
For the meantime, keep reading and learning about investment because that is the first step in Smart Investing and Wealth Accumulation.
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