Are you ready to take control of your financial future?
Investing in the stock market is a great way to grow your wealth, and there are a handful of choices. So, how would you know which investment brokerage to choose? But before that, let’s get some facts about investments in the Philippines.
In 2022, online stock market accounts soared to an impressive 1.26 million. The vast majority, 98.3%, were held by local investors, leaving just a 1.7% share for those based overseas.
In this article, you will be armed with the basic information you need to decide which investment brokerage in the Philippines is best for you. So, grab a notebook and pen, and let’s dive into the world of investments.
- Assess your investment needs and goals
- Evaluate brokerage fees and commissions
- Check the investment brokerage’s reputation and regulatory compliance
- Review the trading platform and tools
- Check the responsiveness of the customer support team
1. Assess your investment needs and goals
To choose the best investment brokerage in the Philippines, assess your investment needs and goals. Identify your investment style – active trading or passive investing.
Active trading refers to a strategy that involves buying and selling securities frequently to generate profits from short-term price movements. If you do it well, there’s a potential for higher returns from the adrenaline rush of quick trades. But there’s increased risk and emotional decision-making involved.
Passive investing involves buying and holding securities for the long term with a focus on asset allocation and diversification. As a passive investor, you may get lower fees, reduced risk, and the potential for steady returns over time. However, investing in this style requires patience, discipline, and a high tolerance for market fluctuations.
Once you have assessed your investment style, you can identify your preferred investment products and services.
You can choose any and diversify your investment portfolio:
- Stocks: Buying stocks means becoming a part-owner of a company. It offers the potential for profits from earnings and dividends and financial risks, as performance is not guaranteed.
- Bonds: These are like IOUs between you and institutions (e.g., government, corporation). You lend money and get paid back with interest later. Bonds have lower risks and returns than stocks.
- Mutual funds: Investing in mutual funds pools money from various investors to purchase stocks, bonds, or securities, providing diversification and professional management. However, fees can impact your returns.
- REITs: REITs are companies that own and operate income-producing properties. Investing in REITs generates income from rent and property sales — an alternative to physical real estate ownership.
It’s important to research each investment option thoroughly and determine which aligns best with your goals and risk tolerance.
2. Evaluate brokerage fees and commissions
When investing using brokerage firms, remember that fees and commissions can greatly impact your investment returns.
Here are some of the fees you should calculate:
These are the fees the brokerage charges for every transaction you make. These fees vary widely depending on the brokerage, with some charging a flat rate per trade and others charging a percentage of the trade value.
For example, BDO Securities charges 0.25% of the gross trade amount, a minimum of ₱20 for buying and selling stocks.
Account fees are the fees that the brokerage charges to maintain your account. This can include monthly maintenance fees, inactivity fees, and other charges.
Some brokerages like BDO Securities don’t charge such fees. Still, account holders are charged a Securities Clearing Corporation of the Philippines (SCCP) fee of 0.10% of the gross amount when buying stocks plus Value Added Tax (VAT).
Remember that slight differences in fees can have a big impact over time. For example, a difference of just 1% in fees can reduce your investment returns by thousands of pesos over the course of several years.
3. Check the investment brokerage’s reputation and regulatory compliance
In the Philippines, the primary regulatory bodies that oversee investment brokerages are the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP).
Want to know if the investment brokerage is legit? Make sure they are regulated by these two:
- Security Exchange Commission: The SEC is the key regulator of financial markets. It approves, suspends, or revokes registration and licensing applications by entities active in financial markets, including brokers. The SEC licenses Capital Market Institutions like brokers, dealers, investment houses, underwriters, and transfer agents.
- Banko Sentral ng Pilipinas: The BSP, also known as the Philippine Central Bank, supervises banks and quasi-banks in the country. While its primary focus is on banks, it also plays a role in supervising financial conglomerates, which may include investment houses and securities brokers and dealers.
Aside from checking their regulatory compliance, you should also check for positive reviews and testimonials from other investors.
Here are a few practical ways to do it:
1. Ask for recommendations from friends and family
Do you have friends or family members who have experience working with brokers for their investments? Ask for suggestions and listen to their feedback. This way, you can better understand their experience and whether or not the broker is trustworthy and reliable.
2. Search for brokers online
It’s now easier to find brokers online, thanks to Google. You’ll find a list of brokers with reviews and ratings by simply typing in “best brokers in the Philippines” in your search engine. Check customer testimonies to verify if the broker is worth trusting.
3. Check the Securities and Exchange Commission (SEC) or Philippine Stock Exchange (PSE) website
To ensure that the brokers you are looking for are legit, check the SEC or PSE website for a list of registered brokers. This way, you can verify their legal compliance and licenses, guaranteeing their capability to handle your investments. Here’s a list of registered investment brokerages in the Philippines on the SEC website.
4. Review the trading platform and tools
The investment brokerage platform and tools are a vital component of your trading experience, and they can make or break your success in the financial market.
When assessing the user-friendliness of the trading platform, you need to consider the ease of navigation for beginners, intermediates, and experts alike. The best way to have a sneak peek of a platform is by watching reviews on YouTube.
A user-friendly platform should have a straightforward and intuitive interface that is easy to use. It should allow you to place orders efficiently, monitor your portfolio, and analyze market trends.
Moreover, you should also check if the platform is equipped with advanced charting and research tools.
- Advanced charting makes analyzing market trends, identifying key support and resistance levels more manageable, and tracking your trades efficiently.
- Research tools are also essential features that provide the latest market insights and analysis, enabling you to stay ahead of the curve in making sound trading decisions.
Whether you are a newbie trader or a seasoned pro, make sure that the brokerage platform offers mobile app availability.
With most people on the go, having a mobile app that allows you to track your trades, manage your portfolio, and analyze the market is a game-changer. A great mobile app should allow you to trade and monitor your portfolio anytime, anywhere.
5. Check the responsiveness of the customer support team
As an investor, it’s crucial to have access to quality customer support and educational resources.
When assessing the responsiveness of customer support, your guiding principle should be to find a brokerage company that is proactive in addressing your concerns. You want a team that is knowledgeable, professional, and ready to assist you immediately.
One way to evaluate the quality of customer support is to look at the channels they use to communicate with you. Imagine yourself in these situations:
- If they primarily rely on email, it can be convenient, but may take longer for you to get a response.
- If they offer phone support, you can get your questions answered quickly, but you may spend more time waiting on hold.
- Live chat is also an option which can provide instant assistance, but the interaction may be less personal.
In addition to customer support, consider the broker’s commitment to helping you grow as an investor when choosing a brokerage platform.
Look for a company that provides educational resources to help you better understand the market and your investments. This can include
- Articles and webinars on investment strategies
- Market analysis
- Basic financial concepts
Furthermore, make sure that the educational resources are easily accessible and understandable. The best educational resources should be user-friendly and provide information that even an average Juan will understand.
Some brokerage platforms even offer free courses and seminars on investing. They organize these events for potential clients to showcase their services. Attend these events to learn about their track record and ask questions before making investment decisions.
For example, First Metro Securities partnered with the Philippine Stock Exchange for the “PSE’s Stock Market 101 Webinar” which is available on Facebook.
Anyone interested in investing in the Philippines should take the time to learn about and evaluate each brokerage before deciding which one is best for their needs.
Do your research on fees and commissions, reputation and regulatory compliance, trading platforms and tools, customer support, and other aspects as you compare different brokerages.
Consider the pros and cons of each, aligning them with your investment goals—partner with an investment brokerage that optimizes returns and offers convenient trading.
We hope this article has offered some insight into how to find a quality brokerage in the Philippines.
Let us know your thoughts in the comments below.