MANILA - Share prices pierced the 8,500-point ceiling for the first time this month, giving new investors an opportunity to bet on the local bourse with the right mindset, an analyst said Monday.
"It’s difficult because very few people have the discipline to pursue difficult ideals with persistence," said Alexander Gilles, a market education consultant for First Metro Securities.
"It is fun to spend in the Philippines than save, but to save is more serious, responsible and mature," Gilles told ANC’s On the Money.
Here are some of Gilles' tips for 20 and 30-somethings who want to ride on the equities market's rally:
Compared to investing in a million-dollar businesses, the average Filipino can invest in the stock market for as low as P3,000.
"The stock market allows you to invest in the thousand pesos, this is more affordable more reachable, accessible," Gilles said.
He likened it to “tree planting,” where every P3,000 invested meant adding another tree to a plantation.
2. Play by the average
Gilles discourages panic buying and selling of stocks when the market goes up or down.
"The trick is not to buy plenty when it goes up and not to sell anything when it goes down, but rather follow the average," he said.
The average stock market growth is at 10 to 12 percent, Gilles said. Following the average rule, it can make a P100,000 investment grow to P110,000 to P140,000 over time.
3. Identify good stocks
Gilles recommends investing in the top 30 companies to “ride the strongest trend in the economy" by choosing one energy company, one telecommunications company, one property and real estate and one in infrastructure.
“Buy fundamentally good stocks, which are facing strong demands because they’re facing strong sales and strong profits. Lets focus on what’s good, what’s competitive, what’s well managed, what’s strategically sound, so that you can grow your money also,” Gilles said.
What’s new and flashy aren’t always the best options, he said.
“You don’t just go for the latest IPO which can shoot up and the shoot down, not all IPOs are good, sometimes only 1 out of 5 is good,” Gilles said.
3. Take risks
The risks in the stock exchange is lower compared to investing by the millions in businesses.
“To have a good reason to do something, because you’re nervous, you’re scared to do something, you know little about it. But you do know that you’re county is progressing, you do have a positive view on the Philippines. Do you think we will have a bright future? If you’re answer is yes then you should invest in Philippines progress also,” Gilles said.
4. Think long-term
Stock market investments are for the long-term. The challenge for financial educators is how to make the 20, 30-year-old population think long term and to transform information to action.
“Set aside some money, let it grow, the plantation gets bigger all the time and then pluck the fruits on it over time,” Gilles said.
5. Make your money work for you
The first step to investing and building a retirement fund is to decide what you want to do with your money, Gilles said.
“Have some aspirations for your money to work hard instead of you working hard, so your money is not just earning 1 percent (in the bank),” he added.