How Much Do You Need To Invest

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How Much Do You Need to Invest in Philippine Stock Market?

by BDO Securities | Oct 10, 2023 | 9 min. read

The stock market can be an incredible way to invest your money for long-term growth. If you’re wondering how much is needed to invest in the stock market in the Philippines, you probably have a few different questions.

Maybe you’re wondering how much you should invest in the stock market – the recommended amount to invest monthly. Or you may be wondering the minimum amount needed to open an account with an online broker? Perhaps you’re even thinking about the fees associated with investing, and if you can afford those fees?

In this article, we’ll answer all these questions - and more!

Brokerage account minimum

Let’s start with the easiest question first – what’s the minimum needed to open an account with an online broker?

You may be surprised to hear this, but there is NO minimum account balance with BDO Securities! All you need is a BDO savings account and online banking. If you have that, you can literally open a BDO Securities account in as little as 5 minutes and deposit any amount of money you wish into the account. That should answer your first question – there is no minimum amount needed to open a brokerage so you can invest in the Philippine stock market.

Online brokerage fees

We know opening a brokerage account with BDO Securities carries no minimum account balance. The next question is about fees – how much are they and can you afford them?

BDO Securities charges a very low fee when it comes to buying and selling stock.

Fees for buying stock with BDO Securities

Below is an example of the fees if you buy PHP 10,000 of stock in a company.

Fee Name	Fee	Example: Buying PHP 10,000	Fee
Securities Clearing Corporation fee	0.01%	PHP 10,000 x .010%	PHP 1.00
Broker’s Commission (PHP 20 Minimum)	0.25%	PHP 10,000 x .25%	PHP 25.00
Value Added Tax (VAT)	12.00%	PHP 25 x 12%	PHP 3.00

Total Fee to buy PHP 10,000 of stock PHP 29.00

Net investment after fee PHP 10,029.00

*Minimum Commission charge is PHP 20.00 or 0.25% of trade value whichever is higher.

The above example shows the fees associated with BDO Securities (including VAT) are very low – to buy PHP 10,000 worth of stock in a company would cost only PHP 29 (0.29%).

Fees for selling a stock with BDO Securities

Below are the fees associated with selling a stock through BDO Securities

Fee Name	Fee	Example: Selling PHP 10,000	Fee
Securities Clearing Corporation fee	0.01%	PHP 10,000 x .010%	PHP 1.00
Broker’s Commission (PHP 20 Minimum)	0.25%	PHP 10,000 x .25%	PHP 25.00
Value Added Tax (VAT)	12.00%	PHP 25 x 12%	PHP 3.00
Sales Tax	0.60%	PHP 10,000 x 0.60%	PHP 60.00

Total Fee plus tax to buy PHP 10,000 of stock PHP 89.00

Net proceeds PHP 9,911.00

*Minimum Commission charge is PHP 20.00 or 0.25% of trade value whichever is higher.

The total fee to sell PHP 10,000 of stock with BDO Securities (including VAT) is only PHP 89.00.

While the fees to sell stock are slightly more than the fees to buy stock, they are still very low. To answer the question – fees shouldn’t be a problem when investing; unless you plan on buying stock in increments less than PHP 8,000.

What’s the minimum amount to buy one stock?

As we discussed above, the fees for BDO Securities are very low – they shouldn’t get in the way of you investing in stocks.

However, there is a minimum amount you should use to buy an individual stock. The commission charged by BDO Securities to buy a stock is only 0.25% or PHP 20, whichever is higher. If you buy a stock for PHP 8,000, the BDO Securities commission is PHP 20 (PHP 8,000 x .25% = PHP 20). Invest less than PHP 8,000 and the commission percentage will start to increase due to the PHP 20 minimum.

The chart below shows how.

The chart shows the amount invested (horizontal axis), the BDO Securities commission based on the amount invested (light blue columns), and the commission percentage (dark blue line).

For example, the first bar shows buying PHP 750 (horizontal axis) of stock would only PHP 20 (light blue column), or just over 2.5% (dark blue line). Now, look at the dark blue line to the right of PHP 8,000. You will see that the commission percentage (dark blue line) flatlines. This is because, when investing less than PHP 8,000 the fee stays fixed at PHP 20 and when you invest more than PHP 8,000 the fee percentage is fixed at 0.25%. Every purchase lower than PHP 8,000 is charged PHP 20 – this leads to a higher percentage fee.

For this reason, it’s recommended to purchase a minimum PHP 8,000 of stock to avoid the fee eating into your investment returns.

How much should you invest monthly in stocks?

There’s no one-size-fits-all approach when it comes to the amount needed to invest in the stock market. The amount of money you should invest depends on your current finances.

For example, maybe you already invest in real estate and want to add stock market investments to your portfolio. In this case, you will likely invest less in stocks than someone in a similar financial situation who is only interested in buying stocks.

A good rule-of-thumb is to save a percentage each month tied to your income. What does that mean? It means you should analyze your finances and decide what percentage of your income is available for you to invest each month. Many financial experts recommend saving 15% - 20% of income. Of course, if you can save more than 20%, you should do so. If you can only save 5%, you should save 5%, then make goals to slowly increase your percentage of investments over time.

How much should you invest to build a portfolio of stocks?

When you invest in stocks, it’s important to add diversification to your stock portfolio. What’s diversification? It’s the process of buying multiple different investments instead of adding all your money to one investment.

For example, diversification in the stock market means you shouldn’t add all your money into one stock. If that one stock has a financial catastrophe, you’ll lose all your money. If you own 20 stocks, then that one stock with a financial catastrophe doesn’t hurt as much because you have 19 other stocks.

In order to create a portfolio of stocks, you may want to buy a minimum of ten to twenty stocks…or more. Returning to the example above, each stock is recommended to have a minimum purchase of PHP 8,000 to manage broker commissions.

If you purchase ten stocks for PHP 8,000, you should have PHP 80,000. If you don’t have PHP 80,000 to buy 10 stocks, maybe start with buying three to five stocks, then add more money to new stocks over time through peso cost averaging. The goal should be to create a diversified portfolio of stocks with a minimum purchase of PHP 8,000 per stock.

Conclusion

When it comes to the amount needed to open a brokerage account and invest in stocks, there’s no minimum account balance with BDO Securities. The ability to open a brokerage account is simple – anyone with a BDO Savings account can do so. The fees to buy stocks through BDO Securities are also very low, anyone can afford the fees.

While the fees are low, it’s best to purchase at least PHP 8,000 per stock due to the minimum PHP 20 commission. It’s difficult to say the exact amount you should invest in the stock market because everyone’s finances are different.

However, it’s recommended to invest a percentage of your income each month. If you can save 15-20% or more of your income, that’s a great start. If you can’t invest that much, save as much as you can, and try to increase your investment over time.

When purchasing stock, it’s important to diversify. Buying ten to twenty (or more) stocks can help you diversify your portfolio. Since it’s best to purchase a minimum of PHP 8,000 of stock, you would need PHP 80,000 to buy ten stocks.

If you don’t have PHP 80,000 you can still buy stocks – maybe just buy fewer stocks with a minimum PHP 8,000. Then keep investing as much as you can each month, and slowly add new stocks until you have a diversified portfolio.

Investing in the stock market here in the Philippines has never been so easy. It’s quick to open a brokerage account and the fees are extremely low. If you have a brokerage account set up, you can start buying stocks now. If you don’t have a brokerage account set up, click the link below to open an account. It’s time to start investing!

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Click here to open a BDO Securities brokerage account in as little as 5 minutes!

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