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Friday, February 28, 2014

A beginners guide to buying Philippine stocks using CitisecOnline (COL)

All our fears stem from our myriad insecurities, and for most Filipinos, what we're most insecure about is money. Most of us believe that either money is the root of all evil, or it is the pre-requisite to most happiness. I personally think it's neither but let's not debate about that here. This post is about how to start buying shares in the Philippines stock market using the services provided by local stock broker Citisec Online (COL). We all fear that which we don't understand so in this post, my goal is to share as much information as I can about how to start investing in stocks using the COL platform. Hopefully, it allays the fears and enjoin every Filipino who reads this to TAKE RESPONSIBILITY AND FINALLY START INVESTING AND SECURING THEIR OWN FUTURE. 'Cause really, 'Bahala na' will not be able to pay for your dream vacations, planned business, and medical bills in your old age. Right! Ready?

PART 1 of 2
   Android phone vs. Cheesy mushroom burger

I posted this status on Facebook last December 2013. During that time, having received my 13th month pay, I contemplated buying a new android phone to replace the one that I had snatched from me by a social delinquent prodigy in August 2013. Like every other consumer, I tried to justify my want with a why: I really needed the mobile apps for communicating with my OFW brother (Skype and Viber, kuripot talaga itey!) and the same reason for connecting with clients in my wellness business.

 But then, the aspiring-billionaire Virgo in me wanting to emulate Warren Buffet kept chanting "Assets,assets,assets..." inside my head.
"You still have a working dual phone SIM, do you really need an android?!," it egged me on.
"It's a lifestyle necessity!," I insisted.
"And your windfall will pass with you having nothing to show for it... Saan mapupunta? Bahbahbahbah..."
I'm not making this up. It's actually a cleaned-up version of the chorus of voices that are resident inside my introverted-Virgo head.

Fortunately, I received my periodic reminder from COL that day, which always prompts me to check the stock prices via Reuters while imagining having Jollibee's cheesy mushroom burger for dinner. I have been buying stocks since summer of 2013 and have really started small, so I have this list of "dream" purchases - stocks to buy when I have windfalls and/or have another stream of income.  JFC is among these companies so seeing the price for Jollibee Foods Corporation dip way beyond the average price since summer of 2013 really excited me more than a new android phone will ever do. That was the story behind the post. It generated several inquiries from friends which led me to eventually write about it here. What follows is the story of how I started buying stocks in the Philippine Stock Market using the Citiseconline platform, and how you can too.

Bo Sanchez. "The turtle always wins"Bo Sanchez and the Turtle
I would love to tell how it all started way from the beginning but since this is instructional, let's just save that story for another post. The most recent I could remember was reading Ardy Roberto's "Ang Buhay na Hindi Bitin" and "Ang Pera Na Hindi Bitin" as New Year reading for myself and my sister for 2012. As all readers are familiar experiencing, one reading material usually relates to several others and among those books mentioned in those highly-recommended booklets was of Bo Sanchez' "The turtle always wins".

We never planned to buy those books (I'm a book sale title-hunter, not a National Book Store book-comber). I believe it was the law of attraction. We have expressed wanting to learn how to better our financial literacy and there they were - books that opened the mind to possibilities and what's better, they are grounded in Christian doctrine and actual practice. What was more wonderful was that Bo Sanchez actually made it sound doable. How doable? His house-helpers and drivers are all stock-buyers.They started in 2009 and at present, if I'm correct, they already have close to half a million in portfolio, from a mere 2000 monthly investment. Ask Bo Sanchez himself. He holds periodic seminars about stock market investing.

The turtle: Cost Averaging
What's important to understand when you decide to invest in stocks is to think long-term: 10 years or more. That's what being a turtle means - slow but sure. It also means consistency and discipline in your investment. These are the two most important factors in cost averaging, a strategy used by investors where one selects a blue-chip company to invest on, and buy stocks from that company periodically over a long period of time regardless of market prices.  Basically, these are the concepts you should grasp:

a. Investment vs. Trading.
To invest is to be in it for long-term, earning through the rise in stock prices over time as well as periodic dividends (depends on the company). To trade, on the other hand, is to time the market and buy when the prices are low, then sell when the prices are high (buy-and-hold). Trust me, you're better off investing, not trading.

c.Blue-chip company. A stable company, with good financial history. Think of the big players in the Philippine business scene: SM Group of companies, San Miguel Corporation, Ayala Land, MERALCO, PLDT, Jollibee, Globe Telecoms. NEVER even think of putting your hard-earned money in unheard of 'penny stocks'. COL has a list of companies to choose from called the 'Watch List' - safe companies which has shown stability and growth over the last 10 years, making them wise investments for your money.

d.Cost-averaging. Basically, this just means ignoring the prices and consistently buying stocks of your companies regularly. The idea here is that regardless of the price flunctuations, the price average of the stocks you bought will still show an increasing/ upward trend. This actually addresses your fear of "lugi" or not being able to profit. If you are buying Jollibee stocks, just keep on buying it every month even if the price plummets. It will eventually regain and increase in value over time.    

Citisec Online: Step-by-step
Bo Sanchez personally promoted using Citisec Online (COL) as a stock broker for beginner investors. It is because he believed in the company's mission to help aspiring stock buyers through their very simple investment programs, particularly the EIP (Easy Investment Program). Personally, I find the company quite revolutionary and heroic in their effort to make stock investment an "abot-kamay" thing for the common tao.

If you are committed to saving, earning, and stretching your financial awareness, COL through its initiatives makes things even easier for you to take your baby steps to financial freedom.  The requirements to using COL are very basic: steady income flow, and a working knowledge of email and the internet since your transactions will be online. 

The company has a very comprehensive FAQ page on their website as well as tutorials on Youtube . What I will describe in this post are the actual steps that I did when I started out. 

Step 1: Have a steady source of cash flow.
Cost averaging basically entails buying stocks regularly over a period of time. In order to do that, you need a steady source of cash to buy your stocks. It can be income from employment or profits from your business/es.

Step 2: Save up.
You are looking to buy and build assets so you would need an asset (capital) for that too. With COL's EIP, you need a minimum of Php 5,000.00 (110-112 USD) to open an account with which you can start buying stocks. For those with bigger budgets, you can also deposit a bigger capital and do likewise for your regular stock-buying fund.

Step 3: Determine your payment method.
When you have the cash to enroll, you also need to provide a way to have your COL account funded regularly . If you have a BDO or BPI account, the most convenient way for you to do this is sign-up for online banking and set-up your account to auto-debit a fixed amount from your fund and deposit this regularly to COL. This is what I personally practice. Every payroll (that's twice a month), my online account automatically deducts a fixed amount from my salary and remits it to COL. The first monthly deduction is for buying stocks of company A, the second deduction is for buying stocks of company B. For 2014, I have set it up for the next 10 months (the maximum advance payment schedules for BDO). You can also pay via bank deposits at BDO, BPI, and Metrobank

Step 4: Sign-up for a COL account.
If you are in the country, an hour (or less if you have already printed and signed all the forms before your visit) is all you need to drop by the COL office at the 24th floor of the Philippine Stock Exchange building in Ortigas. You will just need to sign up enrollment forms, pay the enrollment fee, and wait for COL to email you a day after of your log-in credentials to their website. Once your account has been created, you can start buying stocks.

COL caters to Filipino citizens, resident foreign citizens, non-resident foreign citizens, and in-trust-for (ITF) accounts (for minors).

Step 4: Choose your blue-chip companies and start buying.
Again, I am emphasizing that the companies you choose be "blue-chip." Why? Because you want stability, safety, and profit for your investment, right? Enough said.

To start buying, log-in to the COL website using your credentials as emailed to you, and go to your Portfolio to start trading.

You can buy during trading hours between 9am to 3pm, or during off-hours (OH). Basically there are two ways of buying: you buy available stocks for sale based on asking price, or you buy at the closing price (ATC). Buying ATC means that whatever the price of the stock is at the end of the trading day (3pm), you will buy #of shares. COL automatically computes if your available fund (buying power) is enough to complete the transaction.

Step 5. Buy the same stock regularly.
It will not be cost averaging if you will not institute "stock buying" into your future budgets. And yes, it would have to be stock from the same company/ companies, otherwise, you will not be "cost-averaging", you'll merely be "shopping" for stocks.
It would also greatly benefit your future self if you allocate a fixed percentage of your every windfall (every extra money you get) for stocks, e.g. 30%. By regularly, COL means this in a weekly, bi/monthly, quarterly, semi-annually schedule. See step 3.


Still fearful? Here's part two where I try to answer as many questions as I can think of which might be bothering you still: PART 2
August Bernadette

kaigachi is a conjugation of the Japanese term "kigaicha" or crazy. It roughly translates as "crazy about something."

"One does not become enlightened by imagining figures of light but by making the darkness conscious." - C.Jung

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