Archive for the ‘Philippine Stock Market’ Category

Cost-vs-Value

I got a query on facebook recently from someone who is interested to learn about stock market investment but somehow apprehensive about it due to the cost of investment.

First I would like to apologize to most of my facebook friends. I have been advocating that you invest in the Philippine stock market and yet I failed to consider individual financial capabilities. It is a fact that for the many and uninformed, the word stock market is quite intimidating. People believe that you need to have millions and millions of pesos to invest, giving an erroneous idea that the stock market are only for the rich. In this post, I will clarify some of these myths and I will try my very best to make this as simple as possible.

I personally believe that the stock market in a great equalizer. This means that both the rich and the average income earners can do it. You can buy shares of companies and become partners of growth in big corporations in the Philippines. These include the likes of Jollibee, Ayala Land, BPI, BDO, SM, GMA or ABS-CBN. How awesome is that!

So how much does it really cost to invest in the stock market? My answer is it depends primarily in two things: a. company price per share and b. number of shares you are willing to buy. To avoid confusions, please remember that  by definition a “stock” is equivalent to “shares”. So If I mention about stock I also mean shares. For example, in the case of Jollibee Foods Corporation, their price per share is P201.00 (as of may 29, 2015). Is this something you can afford? It’s funny sometimes because every time I talk about this example, people will assume I meant 201,000. Just imagine, when JFC opens its door in your next visits you can say to yourself that you are part owner of it.

However, our stock market will not allow you to buy just 1 share. Every company sells their share at multiple called board lot. Investopedia defines board lot as a “standardized number of shares defined by a stock exchange as a trading unit. In most cases, this means 100 shares. The purpose of a board lot is to avoid “odd lots” and to facilitate easier trading.” In the case of Jollibee (JFC), the minimum share you can buy is 10. Hence, 201 x 10 = 2,100 as the amount of money you need in order to start investing in JFC. Now tell me, can you really not afford it?

Wait there’s more!

There are also good companies like SM Prime Holdings (SMPH) whose share is only P19.24 (as of May 29, 2015). This is not even close to a cellphone load you buy almost everyday. SMPH’s board lot is 100 so this means 19.24 x 100= 1,924. If you can spend 500 pesos in your facial treatment and splurge 1,000 in Mall’s midnight sales, why can’t you set aside the same amount of money for investment for you and your family’s future? If you truly believe that the company I mentioned here will still exist in the next 10 years, then they can be your best pick to start with.

Clear so far? Do you really need millions to invest? You can answer that question by now.

Now you have the money, what do you do next?

The next thing you need to do is to get a broker. A broker is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission. In this information age, we are so lucky that we can now transact almost anything online. And with this we have online brokers. There are many brokers in the Philippine Stock Exchange that allows you to open an account with them for as low as P 5,000. You can use that amount to start your very first buying of shares in the stock market. Of course if you have much extra cash then you can buy more. But if you are just starting, then P 5,000 is already a great start for you.

Brokers charge you by commissions. By buying and selling shares you also pay taxes that help our country. These are common charges you will encounter and that is normal. It really isn’t much, the most important thing is that you will learn and build a sturdy investment for your future.

I hope this post helps you at least get a better picture of the “cost of investment” in the stock market. Please do not be intimidated about numbers and terms, the more you study this, the more empowered you become.

I will leave you with these information and hopes that you will also do your own research. In my next post, I will explain how you can earn in the Stock Market.

P.S. If you need a financial plan for your investment and/ or coaching, please send me an email at fjaymoli@gmail.com. I will be more than willing to be your mentor and partner in your journey towards financial freedom.

P.S. 2. Please join our facebook group Pagadian City Stocks Network

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