Are you an Overseas Filipino Worker (OFW) who is trying to figure out about what possible investment opportunities while working abroad?
Investing in a stock market is a great option for many OFWs better than savings account due to high inflation rate. Being an investor for over two years, I must say anyone can invest in the stock market as long as you’re willing to learn and have a commitment to accomplish your financial goals. Here are the basic yet important things to remember if you are planning to invest in a stock market.
1. What is a stock market?
A stock market is a place where you could buy and sell the stocks over a period of time. In the Philippines, there is only one stock market called as Philippine Stock Exchange (PSE), same as New York Stock Exchange in the US or London Stock Exchange in UK.
To illustrate my point, let’s take a look at Philippine Long Distance Telephone Company (PLDT) as our example. It is apparently one of the leading telecommunications and digital services company in the Philippines owned by Mr. Manny Pangilinan. He is a business tycoon and currently the Chief Executive Officer (CEO) of the company. But would you believe that he is not a sole owner of PLDT?
Can you guess how many people own the company? May be three, ten, or hundred people? No, it’s more than that. Thousands of people are shareholders who represent ownership claim on business and not just Mr. Manny Pangilinan. When you buy one share, it means you end up owning a small part of the business as a shareholder.
2. Why do companies sell stocks?
To expand PLDT, the company needs capital in order to build more plants and factories, install more satellites and phones, and hire new staff. It is a common practice for any companies like PLDT to sell stocks or shares. We call it equity financing which means issuing stocks to anyone who is interested to buy.
3. How to earn from stock market?
When PLDT lose the business, you will lose as an investor. Therefore, it’s more practical to invest in a long-term than short-term to minimize risks and maximize potential earnings. As a shareholder, you are entitled to receive profits including thousands of other shareholders when PLDT earns over a period of time. But the question is how to earn from stock market investing? There are two ways how to earn from stock market: price appreciation and dividends.
4. What is price appreciation?
Price appreciation is the increasing value of stock over time as company grows and expands its business depending on the market condition. You will earn profit when you sell your PLDT stocks at a higher price—higher than the price you previously bought. Let say the current price of one stock of PLDT is 1,400 pesos. When you sell it at 1,600 pesos, you will gain 200 pesos profit per share.
5. What is dividend?
Dividend on the other hand is the distribution of earnings to each shareholder either in cash or in forms of additional stocks. The company board of directors will then decide and distribute its shares either quarterly, semi-annually, or annually. The amount of your dividend is depend on the number of stocks you own in the company.
6. Why do you need a stock broker?
To open an account, you will need a license stock broker to facilitate transaction. For an OFW like you, online broker is much convenient than traditional broker as you can log-in anywhere and you don’t have to call a traditional broker if you want to buy and sell stocks. Using online broker (like COL Financial), you can buy and sell stock through online platform available as long as the market is open.
7. How to open an account?
You will need to fill-out application form. You will also need government valid IDs such as passport, drivers license, and TIN number. If you are an OFW, you can first scan all the documents and send to your broker via email if there is any correction. The broker will then give you a go signal to send hard copies of all your documents when every page has been checked. Upon approval of your application, you will receive your subscriber number in order to begin funding your account.
8. How much money you will need?
You don’t need to have a big capital to start investing with stock market. In a nutshell, many brokerage firms required just a small amount of money, like five thousand pesos as initial funding. It’s good to start investing using a small amount of money until you get familiarized with the system. Remember, the key to success is continuous education and discipline.
Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this. – Dave Ramsey
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