The stock market is fraught with risk, so it is important to arm yourself with investing smarts before you part with your hard-earned cash.
When you buy a share in a company, you become a part owner without worrying about running its daily operations.
You make money when the company earns a profit. However, you also lose money when the company does.
You can make a profit from the stock market by selling your stocks when the market prices them higher than when you bought them, Marvin Germo, a registered financial planner told ANC's "On The Money."
Share prices fluctuate every trading day depending on how the company performs. When there's negative news about a company, like when it reports a loss instead of a profit, its share price can go down.
An investor can also earn through dividends, which the company pays existing shareholders at specific periods.
"If you're a person who wants to be more passive, you want to get dividends, the more shares you accumulate, the more blocks you get, later on, the more dividends you will get also," Germo said.
The first step in investing in equities is to open a brokerage account and choose the right stock broker, said Salve Duplito, resident financial adviser of "On The Money,"
A directory of stockbrokers is available on the Philippine Stock Exchange (PSE) website.
Duplito said investors should find a broker whom they trust and works for a well-managed brokerage house that will allow them to transact easily online, which can be cheaper.