Financial Blog


A Guide on Investing in the Philippine Stock Market During a Pandemic

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There’s no doubt that COVID-19 changed our way of life. The implementation of social distancing and lockdowns drastically affected economies all over the world. While other countries are lifting restrictions and are ready to kickstart their economy; in the Philippines, we still experience a prolonged quarantine due to a rising number of cases.

As Filipinos continue to be afraid of going out, businesses and establishments will continue to be closed or operate in a skeletal force. As a result, our stock market continues to remain down and there’s a chance it’ll dip lower. To weather this storm, some investors were forced to sell their stocks at a loss to have cash.

For aspiring investors, you often hear that there’s no better time to start investing than now. While this is generally true, what if the “now” is during a pandemic? Should you or should you not?

The short answer is yes—having a pandemic shouldn’t scare you in investing in the stock market especially when prices are down. But, you need to tread carefully especially in an extremely volatile market such as the Philippine stock market.

Ask yourself first: Do you have an emergency fund? Are you an aggressive investor and are you willing to take losses? Are you quite knowledgeable about the stock market and its risks?

If you answer NO to any of these questions, then investing in the stock market at this time may not be the best and safest option for you. However, do not be discouraged as the stock market is not the only way to grow your funds. Learn more about fixed-income investments.

If you answer YES to all, then let us get started with the guide below.

1. Stock up on investible cash

During a crisis, cash is still king. But you shouldn’t lose sight of ways to grow your cash. We’ll also never know how this pandemic would last and when another drop could possibly happen.

That’s why before investing, calculate first the amount you are willing to invest and make sure these are readily available funds. A good place to place your cash is in a savings account or a Money Market Fund so it can be immediately invested once you decide to dive in.

This practice is called “parking” your funds for later use.

2. Educate yourself on how COVID-19 is affecting different industries and investors’ sentiment

The stock market is driven not just by corporate earnings but also by external factors such as but not limited to, weather, political climate, and the current state of the general population (in our case, it is managing the impact of COVID-19). It is important to know first how all of these contribute to the performance of the stock market.

To learn more about these factors and how it affects the stock market, you can continue by clicking here.

3. Plan your investing strategy

Now that you have parked your investible funds and have studied how certain factors affect the stock market, it is now time to choose how you will start investing. In general, there are 2 ways:

First, the all-in method. Say you have PHP 50,000 in investible funds. The all-in method simply means that you invest all of your funds one time and in one go. The benefit of this strategy is you don’t need to worry about future investments (like forgetting to invest) and you get to quickly experience larger gains in the event the stock market rallies. However, a downside of this approach is that if the market declines, then you may experience a larger paper loss compared to the strategy below.

Second, the cost-averaging method. With this method, instead of investing your PHP 50,000 in one go, you partition each investment to PHP 5,000 or PHP 10,000 spreading it out to multiple days or even weeks. The benefit of this strategy is that you can take advantage of future dips in the market while a downside is that in the event of a sudden rise in the stock market, your potential returns shall be less compared to the all-in strategy.

To learn more about this strategy, you may further read here.

4. Choose a fund

There are different types of Equity Funds to choose from – some examples are Dividend Equity Funds, Equity Index Funds, and a plain Equity Fund. Each fund has its own strategy and objective. Before selecting a fund, it is best to learn first about their characteristics and if they fit your investing style.

All the information about a fund is located on its website and may serve as a guide for all new and current investors. We encourage you to research first before fully diving in stock market investing. If you want a quick head start, you may check our UITFs (more on that below).

Consider Unit Investment Trust Funds (UITFs)

Instead of investing directly in the stock market and going to the hassle of researching what stocks to buy, you can invest in our Unit Investment Trust Funds (UITFs). Let seasoned professionals manage your investments. The best part? You can start investing with just P10,000. Furthermore, we have UITFs for every risk appetite.

Remember, you should invest in what you only fully understand. Take the time to read and research and see if investing in the stock market is for you.



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