Why you should start investing in the stock market – and how

More and more young Filipinos are getting into the stock market. That’s because work-life balance is more important than ever, and investing in the stock market is a great way to achieve that – it allows you to spend less time grinding away at your desk by making your money work for you. Plus, investing in the stock market lets you save up for your future while chasing your passions in the present.

You might be thinking that getting into the stock market requires a lot of time and effort. It can be overwhelming to learn about all the financial tools and techniques that will enable you to take full advantage of the stock market. But don’t worry – it’s not something you can’t ease into. Here, we’ve put together a guide with the terms you need to know, and how to get started in three easy steps.

First things first: What are stocks?

Stocks represent shares of ownership in a company. When you buy a share of stock in a publicly listed company, you become a shareholder or stockholder. Simply put, you become a part-owner. This then allows you to participate in the company’s future growth and profits. But that  of course depends on the company’s performance, and investing carries risks – that’s why it’s important to learn how the market works and which companies are worth investing in.

What is the stock market?

The stock market is where you can buy and sell shares of publicly listed companies. In the Philippines, this happens at the Philippine Stock Exchange (PSE), our country’s lone stock exchange. The PSE was formed in 1992 through the merger of the Manila Stock Exchange (MSE) and the Makati Stock Exchange (MkSE).

Why invest in stocks?

1. Higher potential returns 
The Philippine stock market has historically provided higher potential returns over the long term than compared with traditional savings accounts. Although these returns are not guaranteed and stocks can be volatile, well-managed company shares tend to follow the overall growth of the economy’s overall growth. According to the Banko Sentral ng Pilipinas, the Philippine economy is expected to grow by over 6% in the next two years. 

2. Beating inflation

Inflation erodes our buying power over time. By investing in stocks, the potential returns can outpace inflation, preserving – and even growing – your money’s worth and your purchasing power. 
 

3. Dividends

As a company’s part-owner, you’ll be entitled to dividends, which are a share of the company’s earnings proportional to your ownership stake. Dividend investing can be a great source of passive income, often getting better returns than savings accounts.

To get started, you don’t need a deep-dive on stocks but it is essential to understand the basics and the nature of the companies you’re investing in. Here are some tips:

1. Educate yourself. Learn about the basics of stock market investing, investment strategies, and of course, the risks involved. BPI Trade offers free educational webinars and materials to help you get started.

2. Choose a brokerage. A brokerage facilitates the buying and selling of stocks. Pick a brokerage that allows you to buy and sell stocks on the go and offers good customer support and educational services – BPI Trade is a great place to start.

3. Start small. It’s a misconception that you need a lot of money to start investing. But you don’t need millions – build your stock portfolio at your own pace. Your confidence in investing will grow once you get the hang of things. 

Remember, investing in the stock market is all about making your money work for you, not the other way around. So don’t stress – as long as you start early and understand the basics, you can take advantage of the opportunities in the stock market and achieve your financial goals.

Want to learn more financial tips and tricks? Visit The Program for more financial education content.