Overseas Filipino Workers are often accustomed to grow their money through a savings account – however, the risk of inflation carries with it the notion that the money you might save today might not be sufficient for tomorrow’s needs. While saving cash that you can grasp and withdraw at any time is might be ‘safer’, it’s unlikely to have any other opportunity to grow since it’s sitting on the bank.
This is why more and more OFWs are exploring different kinds of investment tools – in order to obtain an additional source of income or gain profit over a specific period. Two popular options are stocks and mutual funds both of which allow investors to build their wealth portfolio over time.
Vanessa Galvez, Assistant Vice President at First Metro Securities, urges overseas Filipinos to take advantage of the ongoing slump in the stock market since data suggests that despite some downturns, the Philippine Stock Exchange index (PSEi) remains resilient and is still on an upward trend for the past 25 years.
“In stocks, time is your best ally. Take this slump as an opportunity to buy good companies. Imagine, going to a mall and seeing your favorite brand at 20% to 40% off, wouldn’t you buy? The same is true with stocks now. Stocks like Ayala Land Inc. now at 31.75 is 38% down from its pre-pandemic price of 50.80 (June 2019). And there are a lot more stocks now that are at least 20% cheaper that their previous price,” advised Galvez.
If you are an Overseas Filipino Worker (OFW) and want to add to your income and secure your future, here are several reasons why you should consider investing in stocks and mutual funds as your investment option:
Affordable: Numerous stock brokers allow opening an account of a minimum of PHP 5,000. Many stocks pay dividends, which are payments made to shareholders out of the company’s profit, and they’re typically paid quarterly.
In mutual funds, you can start investing with only PHP 1000 and then make subsequent investments for as low as PHP 1000. You can inculcate discipline to invest regularly with a Systematic Investment Plan (SIP).
Access to money during investment: Most investment funds offer high liquidity, making them an ideal option for investors who want to be able to access their money at all times. Liquidity means the ability of an asset to be converted into liquid cash. But remember, if you withdraw your money before the recommended time horizon, you could increase the risk of getting back less than you invested. Whenever you assume greater risk in your investments, you should think about the long term to reduce the risk of possible losses during downturns in the market.
Diversification: It is the best way to reduce risk in an investment. Funds are invested in a wide range of stocks, and financial outlets to minimise risks, i.e. interest rates, market prices, etc. There is little chance of all instruments not growing to their potential and thereby making your investment safer. Not everyone has enough money to invest in a wide range of products, but even if you can only acquire two or three products, make sure there is some degree of diversity.
Beneficial and secure: Investment funds have the greatest potential for growth (capital appreciation) over the long haul. Investing in stocks and mutual funds is regarded as a beneficial and secure way of trading. Stocks can be a valuable part of your investment portfolio. Owning stocks in different companies can help you build your savings, protect your money from inflation and taxes, and maximise income from your investments. There are risks involved and your tolerance for the risk makes you stand out amid rapid fluctuations in the market.
Expert advice available: An investor with long-term plans gets experienced with time and also relies on technical analysis from stock market experts. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analysing statistical trends gathered from trading activity, such as price movement and volume.
“We all grew up being told by our parents that properties are the best investment. While that may be true, not many have the millions to buy land or condos. So, while working on that, why not spare just P5,000 to invest in stocks now? It’s low cost, easily accessible, and grows over time as well. This time may be scary to some. But you can make the wiser choice. Instead of being fearful, take advantage of this opportunity. Invest now and let it grow over time,” said Galvez.
How can I start?
With online trading platforms, Filipinos can buy stocks through the PSE. Some brokers allow OFWs to open a trading account without a personal appearance. Applications with supplementary documents can be sent via courier and they fund your account via wire transfers.
For mutual funds, you can open an account through a mutual fund company, registered investment advisor, stockbroker, bank or any other financial intermediary after completing your KYC first time. It also requires a personal appearance to open an account but if you have already a savings account with a Bank in the Philippines, you can have the option to have a trading account online.
It is recommended by experts to start early for long-term gains. Select an online stockbroker, research the stocks you want to buy, decide how many stocks to buy, choose your stock order type, and optimise your stock portfolio.
How can I avoid investment scams?
Stocks in public companies are registered with the Securities and Exchange Commission (SEC) in the Philippines and in most cases, public companies are required to file reports to the SEC quarterly and annually. Annual reports include financial statements that have been audited by an independent audit firm. Information on public companies can be found on the SEC’s EDGAR system.
