The Philippine Stock Market is one of the best channels to invest your hard-earned money. In fact, Overseas Filipino Workers should consider investing their money in the stock market. They can ensure that they can earn additional income without exerting too much effort.
Considering the stability of the stock market, we can say that it is the most convenient and the best way to invest your money. All you have to do is to learn the basics about stock market and how it works. If you’re interested to invest in stock market, here’s a complete guide.
How the stock market works
As soon as you buy a stock from a reputable and operating business, then you start making money. It’s because buying a share of stock means you’re buying a component of the company. The price of the stock is reasonable enough that future investors can still earn a percentage from their investment and whatever income that the stock generates.
As an example, if you will buy a stock from Jollibee, you’ll surely make money from the small amount of investment. Each share of Jollibee costs Php100 and each share of stock is entitled to earn a profit of Php9.09. The profit you earned is called as the basic earnings per share. Thus, buying more shares as you want would mean earning more profit annually along with other incomes that the company has generated.
Important things to know about the stock market
- How much an investor can earn from the stocks?
Apparently, the earnings of the investors depend on the allocation of capital agreed by the management or the company’s board of directors. The management has different options in determining the right allocation of capital such as through cash dividend, repurchasing the shares in the open market, use the money in building up liquid assets or reinvesting the funds.
Thus, the investor should identify the best option advantageous to him or her depending on the rate of return that the company can earn in the future.
- Where your earnings do came from?
Investing in the stock market allows you to make money in different ways such as:
- Dividends – It is the total amount of money typically paid every quarter by the company to the shareholders. The investor can receive the dividends in cash or additional shares reinvested, or it can be deposited into your savings account.
- Increase in the costs of share – The increase in the share price can be obtained if the investor will choose one or a combination of management options discussed above. Likewise, shared purchases can also increase profit and eventually increases the ownership or share of stocks in the business.
Types of investments
- Equity index funds, equities, or exchange-trade funds
Using these funds allows the investor to purchase small pieces of different stocks in just one transaction. You can also combine these funds to develop an expanded portfolio.
- Mutual funds
You can invest in mutual funds if you target just a specific company.
When to get the earnings from the Philippine stock market?
You can get your earnings depending on the agreed date with the board of directors of the company you had invested in. Likewise, the returns are also affected by the generation of dividends and the increase in the share price.
Cost of investment in stock market
Many individuals are interested to invest in the stock market, but they are intimidated about the cost of investment. The good news is that investing in the Philippine stock market does not require huge amount of money. The cost of investment depends on two things such as:
- Number of shares purchased
- Cost of each share
If you will invest in the stock market you should expect that you won’t be allowed to purchase just a single share. But, if it is your first time to invest in the stock market you should look for a company that allows buying a small number of shares.
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Investing in the Philippine stock market isn’t only for those living in the country. Even OFWs working in foreign countries can also invest in the Philippine Stock Exchange. All you have to do is to look or contact an online broker to facilitate the transaction. You can participate and start to invest in the Philippine stock exchange for as low as Php5,000.
Many people were intimidated about the stock market. But, as long as you know the best option of stock suitable to your preference, you can start investing on it.