How To Buy Shares In The Philippine Stock Market

In this article, we’re going to show you how to open a broker account and buy shares in the Philippine stock market. We’re going to be using COL Financial as an example, but the procedures are essentially the same for other brokers as well.

If you’re not sure what the stock market is and why you should start investing in it, then you can read our other articles: Beginner’s Ultimate Guide To The Philippine Stock Market, and also Why The Philippine Stock Market Will Be Your Best Investment

If that’s all good, let’s proceed with what you need to start buying shares in the stock market.

What Do You Need To Start Investing?

There are essentially 4 things that you need:

  1. A stock brokerage account
  2. Cash of about P1,000 to P10,000
  3. Device with internet access
  4. Basic stock picking knowledge

Let’s talk about why you need each one.

#1: A Stock Brokerage Account

A stockbrokerage firm is an entity that helps you execute buy and sell orders for stocks. In other words, you need them to buy and sell stocks in the stock market.

A stockbroker is just a person that represents a brokerage. These days, for most times, both stockbrokerage and stockbroker are just referred to simply as “broker”.

Brokers used to be extremely important back when the internet wasn’t widely used. You used to have to call an actual person, who is a broker, and tell them what stocks you want to buy or sell and at what price.

Right now, though, you can just buy and sell stocks using an online broker account. It’s honestly as easy as online shopping! You can just log-in and start clicking through the website to buy and sell stocks. No need to talk to anyone!

Brokers do a couple of things:

  • You tell them what stocks you want to buy and sell, and they execute the order in the Philippine Stock Exchange (PSE)
  • They keep track of which companies you’re currently investing on
  • They also keep info such as your current profit or loss, and list of past transactions
  • They can update you on the latest news including dividends, stock rights offerings and just general news on what’s happening to companies
  • Most brokers even have suggestions and research to help you choose what stocks to buy, which is extremely important when you start

It’s vital to remember that brokers do not manage your investments. They can recommend what stocks you buy, but the ultimate decision on what to invest on is your choice.

There are many stock brokerage firms in the Philippines.

The most trusted brokerage would probably be COL FInancial, which is also our broker. We have not had any problems with COL Financial and their recommendations are mostly okay, so I would recommend them! (Not an advertisement, we just like them. They don’t even know we’re recommending them!)

If you’d rather open an account with a broker that is under a bank, you can try BPI Trade, DBO Nomura, and First Metro Sec. Can you guess what banks those brokerage firms are part of?

There are also other brokerage firms, and I’ll leave it to you to google them, but I would recommend you choose from one of the 4 above.

“How do I open a brokerage account?”

The specifics will be different per broker, so go to the website of your broker of choice and look for the instructions on how to open an account.

But in general, the steps for opening an account should be like this:

  1. Download and fill the account opening forms on their website.
  2. Submit the forms, together with copies of IDs and other requirements, either online or through a courier (depending on your broker’s requirements)
  3. There is usually a required video verification needed where you would to set a time to get on a call with them to answer some questions. Don’t worry though, these usually takes about 5 minutes and their questions are only there to confirm the info you sent them and verify that you do exists.
  4. The final step would usually be funding your account, depending on the minimum needed by your broker of choice

Once your account is funded, you can start buying stocks of Philippine companies. And speaking of funding, let’s proceed to the 2nd item you need to start.

#2: Cash Of About P1,000 to P10,000

There is a minimum amount that you need to fund your account and complete the account opening process. It differs per broker, but it’s usually in P1,000, P5,000 or P10,000. There are brokers though that would need you to start with P50,000.

A COL Financial account only needs P1,000 to start. However, I suggest you don’t start with that amount as it limits what stocks you can buy.

My suggestion would be around P8,000 to P10,000 to start. An amount higher than that would be better.

Actually, considering the minimum fees you have to pay, you should do your best to buy stocks only if you have at least P8,000 for a single transaction. This makes sure you’re maximizing the fees you paid for.

Speaking of broker fees, you’ll only be paying them when you buy or sell a stock. There are no fees for depositing or withdrawing money from your broker account.

The fees are also very minimal, like probably only a total of P20 for an P8,000 transaction. So don’t worry too much about it.

#3: Device with internet access

As I’ve mentioned in the start of the article, there is no longer a need to talk to an actual person/broker. You’ll be using an online account to buy and sell these stocks.

I’ll be showing you a sample later on buying and selling stocks using an online account.

So, essentially, you’ll just be using your phone or laptop with an internet connection.

#4: Basic Stock Picking Knowledge

This is probably the more difficult part of stock investing.

There are about almost 300 stocks to choose from in the PSE, so which ones should you invest in? And how many should you buy?

The answers to these questions need an article dedicated solely to them.

Don’t worry though! Picking stocks for good investments are easier than you think. It’s so easy, I’m confident a well taught 10-year-old can properly invest in the stock market!

This is especially true since your broker will most likely have recommendations as to what stocks to invest in. Your broker will also have other info to help you shortlist stocks and decide.

More importantly, we’re also here in Baku Finance to teach you how to pick stocks the right way, along with other proper investing lessons, with some responsible personal finance lessons mixed in.

This is why you should stay updated when we release a new blog every Sundays and Wednesdays. Visit our “Latest Posts” section on those days. Also, like us on Facebook and follow us on Twitter, or maybe even join our mailing list. This makes sure you never miss our new blogs!

Using Broker Website To Buy Stocks

Got a broker account? Awesome, then let’s start buying stocks!

Even if you don’t have a broker account yet, you should still read below just to see how easy buying stocks are. It will also get you ready once you finally open a broker account.

There is one last thing we have to talk about before actually buying stocks…

“What Are Board Lots?”

Before we can start with the step by step tutorial on navigating a broker website to buy stocks, you’ll need to know about board lots first.

This is not present in some countries, but it is something practiced here in the Philippines.

You see, you can’t just buy 1 share in the regular stock market, you’ll have to buy or sell a minimum number of stocks. This minimum is called the board lot.

The board lot is also the increments you need to make to buy or sell more than the minimum.

Let’s take JFC (Jollibee Foods Corporation) as an example. JFC’s board lot is currently 10.

This means that if you want to buy JFC shares, you should buy at least 10. You can’t buy less than that.

Also, if you want to buy more than the minimum, then you have to buy in multiples of 10, like 20, 30, 40, 60 and so on.

The board lot is based on the price of a stock, but let’s not go further than that as it’s honestly not that important, as you’ll see later in the section below where I show how to buy stocks.

Remember though that board lots applies to both buying and selling stocks.

What if you really really reaaaally want to buy or sell just 1 stock, or a number that isn’t compatible with the board lot?

Technically, you can do that in what’s called the “odd lot” market. The problem here is that about 99.9% of the transactions happen on the board lot (or “main”) market, so there might be nobody else on the odd lot market that can match with you on your transaction.

Remember, if you’re buying a stock, there must be someone else selling it for the transaction to go through. If you want to buy 1 share of JFC on the odd lot, there might be no one selling that on the odd lot, so the transaction will not go through.

Honestly, just make your life easy by buying in the main market with the board lots and forget the odd lot market. 99.99% of the time, the odd lot just does not matter.

Placing Buy and sell orders in the PSE

There will be a couple of things I will not talk about here. Remember, we just want to start buying stocks so let’s concentrate on doing that the easy way, and forget about all the other irrelevant data.

So, first, you’ll have to login to your brokerage account. Here, we’ll use www.colfinancial.com but the principle here will be the same as the other brokers.

Above is what you would see when you login to your COL Financial account. Don’t mind all the other information for now, it’s of no use or interest to you. In the future though, we’ll talk about what all this information means, but for now, let’s concentrate on buying a stock.

To get to the buy and sell page, just hover your mouse over to the “Trade” part of the page, as underlined with red. Now move your mouse to “Enter Order” and click on that. You should see something similar to the photo below.

This is what you need to know and input on each field:

  • Transaction: Here you select if you want to BUY or SELL. The colors on this will be green when you select BUY and it will be red when you select SELL. We want to buy our first stocks, so we choose BUY.
  • Board: Remember when we talked about board lots above? Yeah, just select MAIN here and forget the odd lot.
  • Term: As a new investor, you’ll most likely just stick to DAY for this one. Don’t mind the others as they didn’t even exist years ago.
  • Stock Code: Here you’ll enter the ticker symbol for your chosen stock. Remember, when you buy a stock for the first time, you should’ve already decided what specific stock that is. If you’re not sure yet, then don’t buy yet and just keep learning. (It’s possible to open a broker account and not buy anything for a long time, so don’t rush!)
  • # of shares: The number of shares you want to buy. Remember the board lot rules!
  • Price: The price you want to buy the stock at. Let’s talk more about this below.
  • Net: This is the amount of cash you need to buy the number of shares you want at the current price. Make sure you have enough available cash!

Very Important: For the rest of the information to show, please fill in the Stock Code part of the order.

(Also, once you enter the Stock Code info, you’ll also see board lot information of your chosen stock appear as well. Just look for it on the right, together with so much other information that you do not need right now.)

You should see the image above when you’re in the order page and you’ve filled the Stock Code field. This shows us information on how much the current prices are and the number (or size) of shares associated with each price.

The “BID” (or buying) part is essentially the offer of people of who wants to buy the stocks of a certain company. Here we see the highest offer by buyers is P4.12 per stock. Also, there are 93,000 stocks that they wish to buy at the P4.12 price.

The “ASK” (or selling) part is how much the stock sellers are selling their stocks. Here we see that sellers want at least P4.14 for each stock, and that there are 230,000 stocks available for sale at that price.

Since we want to buy stocks, the easiest way to do so is just to look at the top price at the ASK part and use that for the price when we order. So, the price we want to buy at will be P4.14. Just enter that price in the order entry field and click preview order and confirm when asked.

(Actually, to make sure the order does go through, I usually use the 2nd or 3rd price in the ASK section, which is 4.15 or P4.16 in this case. Your broker will still buy the lowest price available even if you do this and there is just too much hassle if the order does not go through.)

 

And that’s it! You can confirm the purchase by going to Trade then clicking Portfolio. Your share purchase should appear there.

Congrats On Your First Stock Purchase!

Since you’re now a stock owner, you’re officially an owner of that company. You can now also start referring to yourself as an investor, or specifically, a stock market investor!

Of course, the buying and selling of stocks are easy. The challenging part is on choosing which stocks to invest in. There are also a few more things you need to know to make sure you’re investing the proper way.

This includes knowing what industries make the best investment, knowing when to sell a stock, proper diversification and so much more. So watch out for our new blogs every Wednesday and Sunday.

Good luck, and I hope you learned something!

Do you have questions? We might have answers! Ask us below.

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