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 one of the attractions of stock investing is not only pecuniary return. Through the volatility of stock markets, investors develop an interest in economics and socio-political happenings. Investors also 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 without a large amount of money.
The minimum lot is depending on the stock price. If the investors have the minimum lot of stock, investor can get the right as stockholders. For example, wield the right to vote at a general meeting of stockholders and join the company's decision-making.
Examples for minimum amount and 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. Companies expand businesses by using funds from investors who buy their stocks. Buying stocks means that investors invest the money in the company stocks, which provides the capital for their business.
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 stocks are traded in the stock exchange.
ORDER
ORDER
Investors
Brokerage company Stock Excahage (PSE)
Investors must first open an account in brokerage companies which are intermediate counters and after depositing to the account they can order stocks. Brokerage companies intermediate the transaction to the stock exchange. Stock exchange transacts efficiently huge orders from many brokerage companies in accordance with the fixed rule. The transaction is executed safely and investors settle 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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