7 steps to invest profitably in the Philippine Stock Market in 2020

The current pandemic caused the Philippine Stock Exchange Index plummet by 40% in mid-March 2020. A lot of good stocks are now considered “on sale”. Applying the concepts of Fundamental Analysis on stocks investing, it presents a really good opportunity for stocks investing. We list here the steps and considerations you need to know to jumpstart your stocks investing journey.

Step 1: Know your risk appetite

We have different personalities, preferences, likes and dislikes. The same is true in investing in the stock market. You need to know your risk appetite because stocks investing is a double-edged sword. It can make you rich and it can also make you poor. That’s why it is very important to know your risk appetite.

Do you have money? Is it something that you can afford to lose? If not, how much are you willing to lose? Regardless of the amount, what is important is you are not betting your entire savings in whatever investment you will be diving into. Ensure that you have taken aside enough money for your emergency fund and you are covered by at least a term insurance. Note that the amount of money you should be risking is your so-called “excess money”. If you still don’t have it, then we strongly discourage you to invest a lot.

Step 2: Determine what kind of stock investor you are

There are two kinds of stock market investors: the conservative investors, and aggressive investors.

Conservative investors
Conservative investors employ investing strategy that focuses on preserving capital over profit. They prefer investing to more stable and low-risk securities such as an index fund or the top 5 blue chip companies listed in the stock exchange. They put too much effort in reviewing the past performance of companies and leaning towards on those that are showing consistent profit growth and can provide them with steady dividends over the long-term. They don’t put a lot of credit to newly-established companies with an unproven business model. In short, conservative investors are picky and risk averse.
Aggressive investors
Aggressive investors are the exact opposite of conservative investors. They invest a large portion of their capital directly to stocks rather than index funds and they have a penchant for favoring less well-established companies that can really go big in time. They put their bets on speculative stocks too. As compared to the conservative investors, the aggressive investors actively monitor the market’s movement. They are risk-takers and anticipates higher returns for taking big risks.

Step 3: Learn the basics of the stock market investing

The next step you should do is to understand the world you are about to enter. One of the key factors of success of the great billionaire investor Warren Buffett that he shares to everyone is “to only invest in what you understand”. Thus, you should understand first the stock market – why it exists, how it works, the listed companies, the pros and cons of investing in it, etc. Thanks to the internet because there are lots of available online literature that discuss about the stock market. You can also buy books, e-books, even audiobooks or attend free online courses to help you get started.

Be careful of certain unscrupulous groups or individuals in social media who portray themselves as “experts” or “mentors” who will take a lot of your money for so-called seminars and mentorship programs. Enroll only on legitimate ones of those that have the professional experience and skills. The real experts and veteran stocks investors are not getting signals based on hypes or trends and most of all, won’t charge a lot in seminars, coaching sessions or mentorship.

Step 4: Practice analyzing companies and their stock charts by opening an account with Investagrams

Investagrams is an app that allows you to open an virtual online brokerage account with free virtual money of P100,000. It hosts a lot of free resources to help you learn about the stock market. It has very powerful charting capabilities and contains lots of information about companies in the stock market. It has fundamental analysis and technical analysis features which you can analyze on and practice as you start your stocks investing journey. In fact, a lot of Filipino stock traders and stock investors are using the powerful charting feature of Investagrams more than their real online brokerage account. It’s like a Facebook of Filipino stock traders and investors because of its own online community of stocks traders and investors.

Step 5: Open an online stock brokerage account

After learning the basics and have gotten a feel of stocks investing via Investagrams, the next step is to find a stockbroker. A stockbroker is a company licensed and accredited by the Philippine Stock Exchange to act as intermediary between the stock market and the stock investors or traders. Hence, the stockbrokers are the guys you are going to be placing your “buy” and “sell” orders everytime.

Thanks to the beauty of technology because you can find a good number of online stockbrokers and open an account with them easily. Once your online access is created, you will be notified and then you proceed to funding your stock brokerage account so you can start buying and selling stocks.

Here are the links to some of the popular online stockbrokers in the Philippines (click on the link to learn more):

  1. COL Financial
  2. BPI Trade
  3. First Metro Securities
  4. BDO Nomura
  5. 2TradeAsia
  6. MyTrade
  7. AAA Equities

Step 6: Make your first stocks investment 

The classic question when you decide to invest in stocks is “what is a good stock to buy?”. As of this writing, there are more than 300 stocks listed in the Philippine Stock Exchange to choose from. However, if you are reading this in 2020, then you probably can trim down your choices by looking at the blue chip companies that are currently trading at very low prices. But, don’t rush making a decision to buy a certain stock “because it is on sale”. You need to look whether that stock really has a bright prospect of increasing in value.

Remember that you are investing and not trading on a short-term. Thus, you need to apply the concepts of Fundamental Analysis. Fundamental Analysis is the technique being used by investors in searching, screening, analyzing and deciding finally to whether a certain stock is good or not. It employs techniques such as financial analysis, qualitative analysis and making a sense of the future prospects of a company. You want to invest only on stocks that have value over the long-run.

Step 7: Continuously develop your investing knowledge and skills 

They say long-term investment is boring. It is boring in a sense that you put your money in, then wait and see it grow. You don’t take any action unless you really feel the need to sell your investment at a certain profit or when the market is heading down south. At any rate, it is best practice to hone your investing knowledge and skills by continuous education.

The world is changing really fast and you need to stay relevant and ready to strike if an opportunity gets presented to you. You can only get exposed to those opportunities if you are equipped to identify them and ready to explore them. Successful investors and entrepreneurs know this and that’s why they value continuous learning and development a lot.

The year 2020 will be remembered in history as the year of pandemic all over the world. But it will surely be remembered as the year of great opportunity for stocks investing. So, what are you going to do now?

We can help you kickstart your stocks investing journey this year through our very affordable and first of its kind online course in the Philippines, the Kasiopao Stocks Investing Course for Beginners or even the Kasiopao Stocks Trading Course for Beginners. BUT WAIT, THERE'S MORE: We also have FREE online course for you! Book now on our FREE COURSE: Intro to Stocks Investing and Stocks Trading. Check them out and learn the profitable world of the Philippine Stock Market in your own time and on your own device!


About Kasiopao PH

Kasiopao PH aims to democratize education for Filipinos. It teaches Filipinos financial education, skill-building and entrepreneurship.

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