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Omeng Tawid
So let’s begin!
Stock Market 101
Stocks are simply shares of ownership in a
corporation. Thus anyone owning stocks or shares of
a company is called the company’s shareholder or
stockholder. Being a part-owner, you partake in the
performance, growth, earnings and profits, as well as
losses, of these companies.
The stock market is the place where people
converge to buy and sell shares or stocks through an
authorized stockbroker. That means once you have
your broker and enough money to buy stocks, you
can readily start investing in the stock market and
brand yourself as a noble shareholder of giant
fantastic companies.
In the Philippines, the Philippine stock market is the
place where you can invest in Philippine Stock
Exchange (PSE) - listed companies. And only those
people or firms accredited by PSE as authorized
brokers can participate directly in trading and putting
buy or sell orders.
Why Invest? To make your hard-earned money
work even harder for you
Investing enables one’s savings to grow or
appreciate to achieve various
long term financial goals. It is
said to be the most effective
way of building personal
wealth and attaining future
financial security for
oneself. It also safeguards
one’s capital against
inflation which erodes
the purchasing power
of your money if it’s not
invested.
240
PRICE
220
200
180
160
25-…
29-…
2-Jan
1-Dec
21-Dec
6-Jan
5-Dec
13-Dec
10-Jan
14-Jan
18-Jan
9-Dec
17-Dec
280
260
240
PRICE
220
200
Manila Electric Company (MER)
Dec2010 -Feb2011
180
*Data based on closing prices
160
11-…
24-…
19-…
12-…
13-…
18-…
30-…
25-…
31-…
6-Jan
1-Dec
7-Dec
5-Feb
In both cases, unless you actually sell your winning or
losing stocks, you only see “paper gain” or “paper
loss” in your portfolio. If you decide to keep your
shares, those paper losses or gains can be bigger in
value, or take opposite roles. In the case above, if
MER shares were kept until January 12 2011, the
paper gain could have been bigger given that its
price reached above PhP280 per share. But keeping it
longer until early February would drag it down back
to 220+ level.
Invest in yourself
Here’s the reality: You can
never invest if you do not
have a cash flow (meaning
money entering your
pocket in a regular basis),
for the obvious reason that you need money to buy
any stocks.
FEE AMOUNT
Commission .25% of the gross
trade amount or 20
whichever is higher
Value-added Tax 12% of Commission
(VAT)
Philippine Stock .005% of the Gross
Exchange Trade Amount
Transaction Fee
(PSE Trans Fee)*
Securities Clearing .01% of Gross Trade
Corporation of the Amount
Philippines Fee
(SCCP)*
Additional Fee for Selling
Stock Transaction 0.5% of Gross Trade
Tax Amount
(or Sales Tax)
All these charges add to (in case of a buy order) or
subtract from (if it’s a sell order) the Gross Trade
Amount or Transaction Amount:
Save More
Saving is a prerequisite of
investing. Seeing your
investment growing should
drive and motivate you to
save more each year. And the
best way to do this is by
increasing your income at a
rate greater than the rate of
increase of your expenses.
Find your own little ways on
how you can save more.
Invest More
With more savings, invest in more than one company
and industry as a form of diversification. Investing
more also gives you the benefit of seeing more
significant earnings during favorable market uptrend.
Learn More
This is for those who want to spend more time in
their stock investments. There are a lot of venues
available to increase your knowledge about stocks
investing which can be rewarding in the end. If you
want to test your trading skills before actually
investing, you may try first the “PSE Stock Trading
Game” which can be found at the PSE website.
Check More
Finally, check your stock portfolio from time to time
to see if it’s working as planned. You may want to
dispose stocks that are not moving and replace them
with more aggressive ones, or add more
conservative ones to reduce your risks. The
important thing is to make sure that you’re investing
in quality investments, and that it is aimed toward
your goals.