PDF 5 minute guide to stock investing for beginners - BDO

5 minute guide to stock investing for beginners

For the person who has interest in investing in the stock market, this page will show you the advantage/benefits of investing in stocks and how to execute trade transactions. What are the returns on stock investment? How much do I need to invest in stocks? What is the structure of stock investing?

WWhhaatt aarree tthhee rreettuurrnnss oonn ssttoocckk iinnvveessttmmeenntt??

The basic appeal of investing in stocks is the potential attractive returns. Here are two examples:

Capital gain: Profit from a price increase, buying low and selling high

Income gain: Dividends. The firm will return some of the profits quarterly, semiannually, or annually to shareholders

"Risk and return are two sides of the same coin." It is a hard and fast rule in the investment world. Stocks are no exception. The possibility of stock prices going down after buying stocks is a likely scenario. Listed companies may also go into bankruptcy, but the attraction of stock investing is not only pecuniary return. Investors can also gain corresponding rights as stockholders. For example, wield the right to vote at a general meeting of stockholders and join the company's decision-making. Also, through the volatility of stock markets, investors develop an interest in economics and socio-political happenings. Investors also get to learn to analyze financial statements of the companies whose stocks they buy. These are by-products to make informed investment decisions.

How much do I need to invest in stocks?

Do you have an impression that stock investing is only for the rich people? Actually, you can start to invest even without a large amount of money.

The minimum amount required for trading depends on the lot size. The minimum lot, on the other hand, depends on the stock price. Below are few examples of the minimum amount required based on The Board Lot table of PSE (Philippines Stock Exchange):

(1) Php 2.00 (Share price) X 1000 shares(Minimum lot)=Php 2,000 (2) Php 2.00 (Share price) X 1000 shares(Minimum lot)=Php 2,000 (3) Php 6.00 peso (Share price) X 100 shares(Minimum lot)=Php 600 (4) Php 51.00 peso (Share price) X 10 shares(Minimum lot)=Php 510 (5) Php 2100 peso (Share price) X 5 shares(Minimum lot)=Php 10,500

*There are additional costs for the trading commission.

1

PRICE

From

To

0.0001

0.0099

0.01

0.049

0.05

0.249

0.25

0.495

0.5

4.99

5

9.99

10

19.98

20

49.95

The Board Lot Table

TICK SIZE LOT SIZE

PRICE

From

To

0.0001 1,000,000

50

99.95

0.001

100,000

100

199.9

0.001

10,000

200

499.8

0.005

10,000

500

999.5

0.01

1,000

1000

1999

0.01

100

2000

4998

0.02

100

5000

UP

0.05

100

TICK SIZE LOT SIZE

0.05

10

0.1

10

0.2

10

0.5

10

1

5

2

5

5

5

What is the structure of stock investing?

Stocks are issued publicly to raise the capital for businesses. Buying stocks means that investors invest their money in the company through its stocks, which in turn increases the capital of the business that can further be used by the company for expansion.

What should I do when "I want to buy stocks"? Although the stock issuer is a company, investors don't buy from companies directly. This is because trading stocks is centralized in the stock exchange.

ORDER

ORDER

Investors

Brokerage company Stock Excahage (PSE)

Investors must first open an account in brokerage firms which are the intermediary companies between the stock exchange and the investors. Once the account is opened, investors fund the account so they can buy stocks. Stock exchange efficiently executes multiple orders from different brokerage companies in accordance with the fixed rule. The transaction is executed safely and investors settle their trades through the brokerage companies.

DisclaimerThis presentation is being issued solely for information purposes. This presentation does not contain all of the information required by a party to evaluate the prospects of participating or utilizing the proposed financial products. Potential participants must conduct their own investigations and analysis and rely on the results of such investigation in coming up with a decision to participate in any of the proposed financial products. The data and information presented and included in this presentation do not purport to be complete and exhaustive. They have not been independently verified as to their veracity and timeliness. BDO Nomura Securities, Inc. (formerly PCIB Securities, Inc.), including their respective allied entities, as well as their respective agents, advisers, directors, officers, employees or representatives make no warranty or representation, express or implied as to the accuracy or completeness of the contents of the presentation. This disclaimer extends to any statements, opinions or conclusions contained in, or any omissions from, the presentation or in respect or in respect of written or oral communications transmitted or otherwise made available to the prospective participants, and no representation or warranty is made in respect of any such statements, opinions or conclusions. The contents of this presentation are strictly private and confidential. Accordingly, except with the prior written consent of BDO Nomura Securities, Inc. (formerly PCIB Securities, Inc.), the information contained in the presentation must be held in complete confidence.

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