So what are blue chip companies, and more importantly, how to invest in blue chip stocks in the Philippines? These are common questions that will be answered in today’s guide of investing in blue chip stocks.
For those looking for some additional resources, we have previously spoken about the Philippines Stock Exchange and investing in the Philippine Stock Exchange for beginners, which covers some additional tips and tricks that are incredibly valuable for beginners.
What Are Blue Chip Companies In The Philippines
Blue chip companies in the Philippines are companies that have built a reputation and gone from strength to strength over extended periods. These companies are often the largest, the most financially stable, and often historically pay the largest dividends to investors. Examples include; BDO Bank, Jollibee, Megaworld, PLDT, and Alaya Land.
In other words, blue chip companies in the Philippines are companies that are household names and, due to their market capitalization and historical growth, are seen as safer investments to some investors when investing in the Philippine Stock Exchange.
When investors talk about blue chips stocks or shares, they mean stock from a blue chip company. But, even though blue chip companies, AKA blue chip stock, are seen as a lower risk to some investors, it still carries an element of risk. So, it’s always advised to seek the guidance of an independent financial advisor. Alternatively, you can look at a few of our tips and tricks for some additional support.
How To Invest In Blue Chip Stocks Philippines
Investing in blue chip stocks in the Philippines is a fairly straightforward process; however, it can be confusing for first-time investors, so we’re looking at how to invest in blue chip stocks in the Philippines for beginners. Thus, we have broken down the stages into four easily digestible action steps.
1. Open An Account With A Stock Trader In The Philippines
Before you can invest in blue chip stocks in the Philippines, you will need to open up an account with a stock trader. Once you have opened up an account with a stock trader, you will be able to buy and sell blue chip stocks and invest in other asset classes such as mutual funds, etc.
There are several stock trading options to choose from. Many mainstream banks have departments dedicated to helping their customers invest in blue chip stocks in the Philippines, but the easiest and straightforward process for many investors is to use a company called Col Financial. I have linked to the signing up process above for those looking For more information.
One of the reasons why this company is one of the most popular ways to invest in blue chip stocks in the Philippines is because they allow you to buy and sell stocks from the comfort of your home. As soon as the market is open, you will be able to trade in the Philippine Stock Exchange with a stable Internet connection and your laptop. This company is also open to foreign investments.
2. Fund Your Account
The next important area when looking at how to invest in blue chip stocks in the Philippines is finances. Once you have your account open and you are ready to invest with Col Financial or others, you will be able to fund your account ready to purchase blue chip stocks in the Philippines.
There are often several ways to fund your account, including the majority of mainstream banks and other services such as Gcash.
How much you wish to invest is up to you, but one consideration to make is that stocks have a bored lot. A board lot is the number of shares you will need to buy to complete a transaction.
For example, Jollibee has a board lot of 10. it would not be possible to buy 9 stocks of Jollibee. The minimum amount is 10. Therefore if the current price of Jollibee is 200 pesos and you need to buy 10 as a minimum, then the total amount you will need to invest is 2000 pesos.
Each blue chip stock in the Philippines has a different board lot. Most often, the higher the price of the stock, the less stock you will need to buy. For example, if the blue chip stock in the Philippines is high, then the board lot will be low such as 5 stocks. If the stock is not a blue chip stock and it is very low in value, you may need to buy a large amount of stock, such as 10,000 stock.
3. Find The Blue Chip Stock You Wish To Invest In
Depending on whatever platform you choose, finding your blue chip stock will be slightly different. Still, customers of Col Financial will need to enter the company name or its abbreviation into the quote tab at the top of the page.
When you are looking at how to invest in blue chip stocks in the Philippines, you will notice that each stock has a code. For example, Jollibee food corporation is the official name, but you may find this stock under JFC on the stock trading account. However, you will be able to find it using the abbreviation code for the stock.
Before investing, you will see some additional information, including prices, news, dividends, etc. it’s always wise to investigate each blue chip stock and the recent information before investing. Also, if you are a foreign national, you need to ensure that the stock is open to foreign investments (this will show on each stock profile).
4. Decide Your Price And Invest
The price will continuously change, and real-time data is applied to the stock market, so you see the current price. But how much do you want to invest in blue chip stocks in the Philippines?
If you are investing a large amount of capital into the stock market, 0.25 or 0.5 of a peso may not seem like a big difference overall, but if you are purchasing 10,000 or 100,000 shares, then those few pesos can make a big difference.
If you are investing every week or every month, then the average price of your investment, in theory, balances itself out. Nonetheless, it is often wise not to invest when everybody is investing, as prices will increase.
When you have a price in mind, you can then complete your transaction. Once a seller is willing to sell his or her stock at the price you are willing to buy it for, the transaction will be completed, and you will now be the owner of some blue chip stocks in the Philippines.
When the time comes for you to sell your blue chip stocks, the original process is reversed. This means that you will be able to sell your blue chip stocks as soon as a buyer is willing to purchase these stocks.
Is Blue Chip Stocks A Good Investment Philippines
Historically blue chip stocks in the Philippines are seen as a good investment with the investor community because blue chip stocks have a proven record of growth, stability, and financial bonuses. In addition, blue chip stocks often have high trading volumes, making it much easier and quicker to buy & sell blue chip stocks than other stocks on the Philippines Stock Exchange.
However, as we have seen traditionally, blue chip stocks are not always the safest investment. It is argued that due to the financial assets and low liabilities, blue chip stocks are often much safer than other stocks; however, as we’ve seen in recent years, businesses can quickly change direction and find themselves with a large amount of debt.
So if you are considering investing in blue chip stocks in the Philippines long term, it’s recommended to keep up to date with the latest information.
For those looking to invest in blue chip stocks in the Philippines long term, I would advise carefully considering blue chip stocks with much higher dividend payout than others. Even though this is often seen as a good thing to investors, it may mean that the company is not investing its profits as much as it should back into the business.
In other words, some companies pay minimal dividends but can grow in a short amount of time due to the sacrifice and then later pay a good level of dividends, so if you are investing purely for dividend payments long term, it is advised to consider this during your research into the best blue chip stocks in the Philippines.
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