Stocks are one of the main types of investment instruments. It has a higher risk than others but the returns are also higher. We will discuss two main ways to invest in stocks in the Philippines. Namely, investing in index funds and purchasing the stocks yourselves through an online broker.

Mutual/Index Funds

Let us first define what they are.

Mutual Funds

It is an investment vehicle made up of a combined pool of funds from various investors. This fund is actively managed an investment manager who is in charge of deciding which stock or bonds to buy. As an investor, you earn a portion of the returns in relation to the amount you’ve invested.

Index Funds

An index fund, on the other hand, is simply a type of mutual fund. The difference being, that the fund is used to invest in a market index. The Philippines’ main market index is the Philippine Stock Exchange Index.

Why invest in mutual funds?

PROS

The main advantage of investing in mutual funds is that you don’t have to actively manage it. You defer that responsibility an experienced and well-trained investment manager. It is advisable to invest in mutual funds until you develop enough skills and experience to decide which stocks to buy on your own.

CONS

The returns are much lower than if you actively buy stocks for yourself, assuming that you buy the right stocks.

How to Invest in Mutual Funds in The Philippines

There are several methods to do this. The one I advise for newbies, however, is to invest with reputable banking industries. Of all the banks I prefer using BPI due to their low fees. Other banks have much higher fees.

STEP 1: Log-in to your online BPI Express Online account.

STEP 2: Head over to the Investments tab. Under the Investments go to “Apply Now” and choose Unit Investment Trust Funds.

BPI UITF

STEP 3:

Simply follow the procedure as indicated in the window that will appear. Click the “Continue” button at the bottom to proceed to the next step where you are required to input personal information.

STEP 4:

You are then required to answer a set of questions that will access your risk appetite. This will ensure that you will invest in a fund that would match the level of risk that you are willing to take.

STEP 5:

Once completed, print out the form and submit it personally to the BPI branch you indicated. It usually takes 1 week for it to be processed. The initial investment amount is Php 10,000. However, once you’ve fulfilled that requirement there is no maintaining balance required. It means that you can withdraw the entire amount. The minimum amount required for subsequent transactions is just Php 1,000.

 

How to Purchase Stocks Through a Stockbroker

As stated above, once you’ve developed enough skills and experience in investing, it is time to move on to purchasing stocks by yourself. This is achieved by using the services of an online stockbroker. The biggest and most reliable stockbroker in the Philippines is COL Financial.

 

How to Open an Account with COL Financial

STEP 1: Download all the necessary forms HERE. These include:

  • Customer Account Information Form (CAIF)
  • Foreign Account Tax Compliance Act (FATCA)

 

STEP 2: You will need to provide the following additional documents:

FILIPINO CITIZENS

Photocopy of one (1) valid government issued ID
Photo and signature must be clear

RESIDENT FOREIGN CITIZENS

Photocopy of one (1) valid government issued ID
Alien Certificate of Registration (ACR) or Work Permit from DOLE

NON-RESIDENT FOREIGN CITIZENS

Authentication of a photocopy of one (1) valid passport

IN-TRUST-FOR (ITF) ACCOUNTS

Photocopy of one (1) valid government issued ID of the parent
Birth Certificate of the minor applicant

STEP 3: Submit your forms

You can either submit it to them personally or through mail. I would advise to submit it to them personally so any issues regarding your application forms would be handled immediately.

2 Comments

  1. OFWs can also open a discount brokerage available in the foreign country where they are and buy index funds focusing on Philippine stock like EPHE, an iShares ETF.

    Reply
    • Thanks for this information. I never knew this until now.

      Reply

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JM Castro

Owner/Chief Author at One Peso a Day
JM Castro is a Certified Public Accountant that currently works as the chief accountant of a Philippine based startup. He is also the owner and chief author of One Peso a Day.
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