“Ang hirap kumita ng pera” is a very common Pinoy expression. It resonates with a great majority of the country’s population. So if you’ve been enjoying a zero-debt lifestyle, have enough emergency funds and have secured insurance packages for your dependents, good on you. That means you’ve been managing your finances well. And you can now up your game by moving to the next step: investing.
One way to invest is thru stocks—which can be a pretty intimidating topic to learn and understand for the uninitiated.
How do you turn yourself from being a simple saver to a savvy investor? In one of her vlog posts on Salve Says on YouTube, ANC’s On The Money anchor and resident financial adviser Salve Duplito provides a basic step-by-step guide to turning your hard-earned savings into big-time investments.
Step 1. Invest in equity index fund.
“This is one type of investment that allows you to put money in the stock market with smaller amounts and not have to pay very high fees,” Salve says. “That’s because your investment is pooled along with other people’s investments, and used to buy the 30 best companies in the stock market.”
You don’t need a huge sum to invest on this fund. In fact, for as low as P1,000, you can already set up an equity index fund account with your bank of choice, says Salve. Note that you have to be a “moderately aggressive” to “aggressive” type of investor in order to access the equity index funds.
Needless to say, you will have to fund this account. It’s best to set it up in such a way that your funds are transferred regularly (every payday) from your main account to your equity index fund. “Be consistent,” she advises. It’s called peso-cost averaging, or setting aside a fixed amount to invest in an asset at regular intervals.
Step 2. Open an account with a stock brokerage company
One of the changes that this Covid pandemic has brought is the digitalization of transactions. These days, setting up an account with a stock brokerage company can be done online. While you can fund this account the traditional way (e.g., use of check payments), it would be more convenient to fund it by transferring money from your expense account by simply using a bank app.
Step 3. Identify industries to invest in
This is the most exciting yet the trickiest of all, says the finance journalist. Since people have different ages, goals and personalities, it is natural for people to have different preferences on what stocks to invest on. Also, identify the industries that suit the timeline of your investment. Ask yourself: when will you be most likely needing your funds? Is it after 10, 20, or 30 years?
“Now that we are still in the middle of the Covid 19 pandemic, we need to be choosy. Wag ma-fall agad,” says Salve. “Okey lang maghintay ng matagal for returns basta maiwasan natin ang permanent loss of capital.”
To prevent this, a smart investment strategy would be to bet on what are considered “essentials” in the stock market. They are the following:
1. Tech and telco
“In a span of two Covid years, digitalization has gone forward 100 years into the future,” Salve observes. She recommends three under this sector—PLDT, Globe, Converge. “I think PLDT and Globe still have a chokehold over this sector. Converge ang pinaka-promising na bagong player,” she says.
2. Power
In a world dependent on computers and mobile phones, investing on this industry is a no-brainer. Top stocks to watch are Meralco and First Gen. “Meralco walang on-and-off switch yan when it comes to cash inflow. FirstGen naman is in an industry that is growing tremendously significant,” she offers. Another player to watch is AC Energy Corporation.
3. Pharma
Covid continues to have an impact in our world today, which is why pharmaceutical stocks remain to be a viable investment. But since Unilab is still unlisted in the stockmarket, one may choose to put their money in either US stocks or mutual funds in the Philippines that invest in pharma companies overseas.
4. Food manufacturing and retail
There are so many options to choose from in this category. So the trick is to pick those that have survived well during the pandemic. Salve puts in a good word for supermarket chain Puregold, specialty retail company Stores Specialist Inc., and manufacturing firm D&L Industries. Puregold has pivoted during the pandemic with its strong digital platform, notes Salve. SSI apparently also thrived during the pandemic due to the country’s aspirational economy. Meanwhile, D&L’s positioning, management, and product quality remain topnotch during the pandemic, says Salve.
5. Construction and infrastructure
Many construction projects were discontinued during the pandemic. But that doesn’t mean we won’t be needing them in the future. “Covid made construction very difficult for everybody in this industry. But we have to think long-term,” says Salve. Ten or 20 years from now, we’re going to need all of those projects, especially since better homes and workspaces have become a top priority because of Covid.
Many of the companies listed under the infrastructure category are holding companies, which are also involved in other industries. Examples are Phinma, Holcim, Concrete Aggregates Corp, and TKC Metals.
So the best bet, as per Salve, would be Megawide Construction Corporation, considered as one of the leading construction firms in the country today. “It might have some debt restructuring bumps, but the value of its economic activities is worth looking into,” says Salve. She mentions its notable projects—Mactan Cebu International Airport, Parañaque Integrated Terminal Exchange, and some 10,000 public school classrooms.