Philippine Stock Market - FAQ :: Frequently Asked Questions

What are stocks?

Stocks are shares of ownership in a company. When you buy stocks of a publicly listed company, you become part owner of that company.  As a part owner, you participate in the company’s growth and future profits. Conversely, you may also lose if the company suffers a loss or performs below market expectations.


What is a stock market?

The stock market is a place where stocks are bought and sold or a place where people can invest in publicly listed companies through the Philippine Stock Exchange, Inc. (PSE).


Why invest in stocks? How do I make my money grow in the stock market?

Historical data has shown that investing in stocks over the long-term provides superior returns. Stocks offer potentially higher yields compared with fixed income instruments such as time deposits, government securities and bonds. There are three (3) rationales for stock investing:

a.    Ownership in a company

When an individual invests in the stock market, he automatically becomes a stockholder of a particular listed company. As a stockholder, he is entitled to the following benefits: a.1) voting rights; a.2) dividends to be declared by the corporation; and a.3) share of the remaining assets of the company if it is to be liquidated.

b.    Liquidity of funds

A stock market investor has  easier access to funds. Compared with banks which require high minimum conditions for deposits and credit, an individual can start an investment for as low as Php 5,000.00. He can cash in or out his funds during trading hours, through his broker.

c.    Make money

Investors in the stock market make money through dividends and capital appreciation. When a listed company declares dividends, its shareholders increase their investing power. An investor who buys into the company at a low market price and sells it at a higher price will gain capital appreciation.


What are the different dividends given by publicly listed companies?

There are two types of dividends that can be given by companies:

a.    Cash dividends - these are earnings for every share of stock declared by the company.

b.    Stock dividends - these are additional shares given to shareholders at no cost which can be sold anytime.

View historical dividends / rights declared by listed companies.


Is there any risk involved in investing?

While it is true that a stock investment is the most volatile of all securities, investors might well remember that uncertainty is a permanent feature of the investing perspective. This means that risk is always a part of any investment. A better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set, and calculated decisions should be made when this level is reached.


How do I start investing in stocks? How much of my savings can be invested in stocks?

Just like an ordinary savings account, an investor has to open an account and present valid identification with a broker before he can actively trade stocks on the Exchange. An investor would need at least the minimum amount of investment to open a trading account which is Php5,000.00.

Getting started in the stock market is a simple process.

1.   Choose your stockbroker or trading participant (view Stockbroker's Directory).
2.   Open a trading account with your stockbroker of choice.
3.   Place your buy or sell order either online or through a phone call to your stockbroker.
4.   Monitor and keep track of your investments.


What is the minimum amount of initial investment?

The minimum amount of money needed to invest in the stock market depends on the minimum number of shares to be traded for the stock and the minimum amount required to open a trading account. The minimum number of shares that can be traded will be determined by the prevailing market price of a particular stock. The PSE has a Board Lot table which shows the minimum number of shares that can be bought or sold given a certain price range.

Read more: http://www.pseacademy.com.ph/LS/staticpages/id-1309854652920/FAQs.html