Low Risk Stocks For Beginners In The Philippines: Stocks can sometimes be a complicated minefield, but with new technology, online brokers, and cyberspace full of information finding out low-risk stocks, especially in the Philippines, has become easier than ever.
If you are looking for a beginner’s guide to stock trading or perhaps some stock market advice, then starting with low-risk stocks could be your foundation to grow.
Today, we will walk you through our 5 golden rules to find low-risk stocks on the Philippines stock exchange & we are going to throw in a bonus example of stocks we feel are perfect low-risk stocks for beginners.
1. Low-Risk Stocks Typically Are Those Who Have Disturbed Regular Dividend
This golden rule is one of the best stock market advice tips I can give to beginners. If you are unfamiliar with the process of dividends, the concept is straightforward. Dividends are how a corporation thanks its shareholders for investing their money by rewarding them (often once or twice a year) with cash or stocks. These happen when a company is healthy in business and is making money.
So why does this rule mean the stock is a low-risk stock for beginners? In theory, if a corporation is showing continuous Dividend payments over the last several years, it shows growth in the company, which means less risk for you as an investor. Does this mean it’s risk-free? Sadly, it will show you that the corporation has been on a steady increase over the last few years.
There was no stock market guide for beginners when I started investing, and in my early 20s, I lost 50K on one company because I was naive. Looking at the stock now, you can easily see It was very high risk. I later found out they had NEVER given a single dividend payment through the corporation’s history!
2. Low-Risk Stocks For Beginners Typically Are Those With Solid Historical Data
There is so much data you can find out about stock in the Philippines just by doing some research online (My core 2 sites for information are www.pesobility.com & www.bloomberg.com but if you are looking for low-risk stocks you will perhaps need to move your focus onto specific data, I tend to focus on 2 specific areas when deciding the risk level of the stock such as;
Age of the stock:
Does the age of the corporation matter? Well, here we are not talking about the age of the corporation, but about the length of time, a company has been listed on the Philippines stock exchange. Let’s say we have 2 companies, company ABC and company XYZ.
Company ABC has been on the Philippines stock exchange for nearly 30 years (Registered in 1990). The price has remained steady over the years, but it has increased and decreased over the last 5 – 10 years…
…Company XYZ is a new company that has been listed for a few months and as the company is new to the market, the market is currently deciding its value, so prices have been increasing and decreasing more drastically than company ABC. This time a corporation that has been listed on the stock market is true on a theoretical foundation, but other factors can swing risk levels, so this advice should be taken with a pinch of salt.
People in charge of the business:
One thing I always look at is the management, main stockholders, and other people in the business who are what we would call ‘People in charge.’ The reason I tend to look at this is that some corporations who are struggling or have high-risk stock tend to change their ‘people In charge’ very often so this historically data highlights to me there seems to be some problem or deep concern internally which then shows me this may not be the best low-risk investment.
Remember, we aim to find low-risk stocks in the Philippines for beginners, sadly low risk often means low reward, so these stocks may not be the best for your overall profitability goals.
3. Low-Risk Corporations Tend To Control Their Spending
Spending corporations usually take risks, unfortunately, this risk is not a low risk for their share prices. Jollibee is a famous stock for this subject of spending. You may have come across the news recently that Jollibee will be buying coffee leaf & Tea leaf, and this is not the first time they have brought struggling companies here to the Philippines.
The deal they struck will, of course, impact their stock, and if you feel this will pay off, then that’s great! But we can’t put this stock into a low-risk investment group because a company that spends like Jollibee has (Even though it’s only a small part of what they have) can’t be classed as low risk.
Personally, if you have stock in Jollibee, then I feel this is a good investment. I own Jollibee stock. I hope you can now see the difference between stock risk levels because it’s not always about the risks it’s about the financial future.
4. Low-Risk Stocks Generally Have Fewer Liabilities.
Golden rule 4 in our Low-Risk Stocks For Beginners Philippines list is often overlooked. If you have not come across the term liabilities in the business world, its definition is simple. A liability is a legal, financial debt a business has yet to pay this could be through a loan or perhaps an item purchased that is costing more money than its making a list goes on.
So if you own a small company and you wanted to expand but could not afford to do so, you could go to your business bank and borrow 5 million pesos. This would then help you expand but incorporate terms your business now has a liability.
Most business minds like yours understand that if a business took out several liabilities this would affect cash flow, business, and potential profits which all have an impact on the stock of that company often at times corporations accumulate liabilities due to poor leadership or just risks that did not pay off this is another stock market tip for beginners I would recommend new traders to look at.
TIP: Rule 4 should be in every guide to investing in stocks as many companies have taken out loans and invested in liabilities which has caused their stocks to decrease in value shortly after.
5. Low-Risk Stocks Philippines Generally Have A Diverse Business Model
What is a diverse business model, and what does this have to do with low-risk stocks in the Philippines? Some companies stick with what they are good at especially those who have been doing it for many years, but some companies branch out into different business models and grow into different industries.
Even though initially this is a risk (if you buy a stock at the transaction period), it may not be after if they have been successful. If one area of their business model starts to slow down or lose money, they can still increase profits over the next quarter due to other areas of the business. As a result, this tends to show me as an investor the stock has less risk than other stocks that are just sticking to one industry.
It’s very similar to your own stock investment. If you invest only in one industry, for example, aviation, and some enormous negative event occurs then this would most likely effects all stocks across that industry this means you would have placed your investment into a higher-risk investment compared to another person who split their investment into different industries across the market.
Low Risk Stocks For Beginners In The Philippines – Example:
So now, we have listed our golden rules to follow to find low-risk stocks in the Philippines. We will now share with you an example company we feel was a low-risk stock in 2019. This will hopefully highlight a few of the points we have spoken about today in this article. The information below is not to be taken as stock trading advice for beginners.
There is more information to find out which an investor should research before selecting a stock; however, currently, this is a perfect example of low risk.
Remember a low-risk investment doesn’t always mean the best investment 😉
Company Name Example: Ayala Land Inc
Current Price Per Stock: 47.30 PHP
Why Has this made a low-risk rating for filipinowealth.com?
When you look at an overview of Ayala Land Inc over the last 5 years you can see historical growth in this stock this is likely due to external factors such as the growth in the economy and population development, both of these factors are pushing for a rise in real estate that looks to continue as we enter 2020 and beyond.
In addition, this corporation has done a great job of diversifying the corporations by opening different branches under the umbrella of Ayala land. They have also decreased the debt they had on their assets in 2017 which all point in the right direction, therefore, we believe the stock to be an outstanding low-risk stock in the Philippines for beginners as we do not feel this stock will lose value or be volatile in the approaching years.
When we researched this corporation, we looked for external information and looked at forecasts for Ayala Land Inc, and my professional view is this is an outstanding stock.
My only concern would be on the real estate industry as a whole because prices have increased and performed well in recent years. Hence,o I’m apprehensive a dip will soon happen in the next 5 years, but as I mentioned this is based on a personal view and not any business data.
TIP: We are super excited to share with you our new article titled The Philippines Stock Exchange Beginners Guide which you can view HERE
When you are looking for low-risk stocks or a beginners guide to stock trading there is no secret that there are tones of information and tips for the Philippine stock market however what we always try to give here at Filipino Wealth is information that is not original but which concerned ‘out of the box. So here are a few tips and topics we would look at when investing in stocks.
- Future of the industry
- Upcoming market trends or upcoming companies that could break your stock (Take the famous case of blockbusters and Netflix)
- World events that could have an impact on corporations and industries can be through a change in prices, equipment, and labor. This affects the business and therefore the stock.
- Merging companies? Will this company buy another do you predict?
- Experiences and background of CEO and management
These points some experts would most likely laugh at! But experts also laughed when people brought bitcoin in 2013! So my advice for beginners in stock would be to leave no stone unturned.
You may need to spend days or weeks studying a small part of a company, but that time you study could provide you with thousands or even millions of pesos! – Low Risk Stocks For Beginners In The Philippines
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