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Bank
Account
My MONEY
Savings Account,
or
Checking Account
Contains only
MONEY
Savings Account,
or
Checking Account
Stockbroker
TRADING Account
+ Dividends
MONEY
Contains only
MONEY Stock Div.
+ SHARES of stock
Cash Div
Stockbroker
Account …“for ON-LINE
TRADING…”
You input your own
Transactions.
in your own
computer
Stock
Trading
Account
Stock
Exchange
You
actually
reach the
directly
Stock
broker You,
the
client
Stock
Exchange
This is the new method, to buy a stock
Stock
Trading
Account
Buyers
Sellers
Sellers
Sellers
Buyers
Buyers
Stock
broker You,
the
client
Stock
Exchange
No need to wait …to make a phone call
Stock
Trading
Account
Buyers
Sellers
Sellers
Sellers
Buyers
Buyers
Stock
Exchange
You can see what other investors are doing.
You can interact with them via computer.
Stock
broker You,
the
client
Stock
Trading
Account
Go to
your
computer
B U Y
S E L L Account:
Free of Charge
P.S.E.
Customerservice
@firstmetrosec.com.ph
“open an
account”
6,600
Dial 8590600 for guidance.
customerservice
@firstmetrosec.com.ph
Ask for help, to open an
online trading account
Fill up forms “ONLINE”
Account
Information
Trading
Agreement
Signature
Card
Print &
Sign
Photocopy of
ID cards Attach Place in
an Envelope.
Fill-up, then: print.
courier of
Metrobank
branch
Deliver to
First Metro Sec
Print &
Sign
“Open
Account”
Creates ONLINE
Trading Account
Email for You… c/o any Metrobank branch
courier pouch 90033
Deliver …
Your APPLICATION for an online trading account, has been approved.
First METRO Sec
Stock Trading
Account
Stock 1
Stock 2
Stock 3
etc
Cash Check
OLD style: Deposit 25,000 at the start, to be
allowed to trade.
LINE UP AT THE TELLER…
Online trading account:
1. OPEN A
STOCK-
TRADING
ACCOUNT.
2. INFUSE MONEY.
3. BUY STOCKS.
STEPS
Start:
add
more
money. “PREPAID”
PURCHASES” 25,000
First METRO Sec
Stock Trading
Account
Cash Check
25,000
Dear Bank Teller:
.. My own
STOCK
TRADING
ACCOUNT
“I want to
deposit Cash
into”
OLD style: Line up, at the teller
NEW style: online transaction,
SECURE.
First METRO Sec
Stock Trading
Account
Metrobank
Account
To RELOAD cash into the “prepaid” account
Thru
“Metrobank
Direct” online
service
IF you have no Metrobank account, deposit P25,000 into
the stock-trading account, as minimum start-up.
IF you have a Metrobank account, no “minimum balance”
is required.
Stock 1
Stock 2
Stock 3
etc
25,000
user name
password
100,000
You see your
“available balance”
Same amount as
the balance inquiry
at ATM machine.
Balance: 100,000
100,000
You will be able to directly transfer
money from your bank account to your
stock trading account.
“Add funds for stock trading”
30,000
70,000
First METRO Sec
Stock Trading Account
Straight into: Stock Trading Account
No minimum balance of 25,000 required for
the stock trading account, if you connect it
to a Metrobank “deposit account”.
30,000
Cash:
Shares
Shares
First METRO Sec
Stock Trading
Account
Metrobank
Account
To RELOAD cash into the “prepaid” account
Thru
“Metrobank
Direct” online
service
Log into Metrobank.com.ph, and view your own account.
Transfer money, by yourself, to
your own stock trading account.
No transaction fee
No transaction
fee, either
Does not earn
Interest.
First METRO Sec
Stock Trading
Account
Metrobank
Account
Minimum Balance: P2,000… earns interest.
Use the STOCK TRADING ACCOUNT to buy
STOCKS that pay an 8% cash dividend yield.
First METRO Sec
Stock Trading
Account
Metrobank
Account
Two separate accounts, separate Log-IN
Thru
“Metrobank
Direct” online
service
If you forget ...password, …answer guide questions like:
“What is your favorite sport? What was your first school
? Name of your pet dog? Name of your favorite actress.”
First METRO Sec
Stock Trading
Account
Metrobank
Account
If you sell a stock, you can use
the money to BUY other stocks.
Thru
“Metrobank
Direct” online
service
If you sell a stock, MONEY STAYS in the Trading Account.
Then, you may use the MONEY, to buy other stocks,
on the same day…
First METRO Sec
Stock Trading
Account
To WITHDRAW CASH, FROM
STOCK TRADING account
Thru
“Metrobank
Direct” online
service
There is money in your TRADING ACCOUNT… You
download the WITHDRAWAL SLIP from
www.firstmetrosec.com.ph. Sign it. Fax to me. Scan it,
email to [email protected].
Stock 1
Stock 2
Stock 3
etc
Metrobank
Account Sign Withdrawal
SLIP.. Fax
Online STOCK-
TRADING Account
Money
BANK
ACCOUNT
Stock
Stock
Stock
Stock
Stock
Stock
Mutual FUND* Stock
*F.A.M.I.
Money
Money
Study the market
Make a Plan
Finally, Decide.
How the trading account works:
Online STOCK-
TRADING Account
BANK
ACCOUNT
Mutual FUND*
Money Stock
Stock
Stock
Stock Money
IF “Joint
AND-OR”
Must be also
“Joint AND-OR”
NOW 11
months
12th
month
3. Open ‘Online
Stock Trading
Account’
Think Ready? 1. Metrobank
account *
2. Ask for Online
“Direct” Access Plan
Observe
Put in
Money
Trade,
invest
Study
One million
ONE MILLION
PLDT =
stock code
“TEL”
STOCK
“SYMBOL”
one
character
per stock.
Example of a “BUY” order
2,800
280,000
Stocks that
you own
# of
shares
Bought at
this price
Now trading
at this price
Your
“COST”
= Value of
your
“POSITION”
Your “PROFIT, so far”
minus
equals
=
After buying the stock
• You will get a
‘Confirmation Slip,’ online
• You will see ‘Statement of
Account,’ online
• You can view your
Portfolio Holdings, online
You can see, what you
have bought, so far…
“ALERT me
by email
when the
price of this
STOCK
reaches this
PRICE.”
“Send the
share
prices to
my email,
at
noontime
and after
the close.
Price of the
stock
At least:
Shares
Minimum
Investment
5,000 5 25,000
4,999 5 24,995
1,999 5 9,995
999 10 9,990
499 10 4,990
199 10 1,990
99 10 990
49 100 4,900
19 100 1,900
9 100 900
Minimum Order Size
10K
2K
25K
“Board Lot”: minimum # of shares.
Types of Fees Amount Buy Sell
Stockbroker’s
commission plus
12% Value-added
Tax on
commissions*
BC allowable range is 0.25% to
1.5% or a minimum of
Php.20.000, whichever is
higher
Clearing Fee
0.01% of transaction amount
PSE Transaction
Fee
1/200 of 1% of transaction
amount
Stock Transaction
Tax
0.5% of transaction amount
Trading Costs
¼ of one percent
1% of 1%
1/200 of 1%
Half percent
BUY Pesos
10,000 x 0.0025 25 broker comission
x 0.0001 1 clearing fee
x 0.0000005 0.005 stock exchange fee
26.005 pesos
For every P10,000 worth BUY
order, TXN costs are 26.005
SELL Pesos
10,000 x 0.0025 25 broker comission
x 0.0001 1 clearing fee
x 0.0000005 0.005 stock exchange fee
x 0.005 50 government tax
76.005 pesos
For every P10,000 worth SELL
order, TXN costs are 76.005
When can you execute trades?
till
When can you ENTER an online ORDER?
ANY
TIME It gets
implemented
by 930am
AFTER HOURS !
NEXT DAY
Trading: Buying
& Selling of Stocks
Investing: placing
more & more money in
Stocks
Expert
BEGINNER
Experiments, First Steps
Read the news, tips…
view technical charts.
“What stocks to buy?”
read daily TIPS
5,400
• www.stockxchallenge.com free
download of my lecture files
• www.slideshare.com/sandygilles
• See also the research reports on
www.firstmetrosec.com.ph /
RESEARCH
Investing in Equities
Stocks, direct
or
Via Mutual Fund
Deposits are
insured: For Risky Assets:
Universal
Bank, does
both, plus, it can
own insurance
company.
Stockbroker
They put money
“to work”
PRIVATE MUTUAL
BANK FUND &
“U.I.T.F.”
Savings B
Comm’L B
Investing
your millions
for you
“Safe” Unsafe,
Uncertain !
Investing your
thousands for you
Which “bank” invests your
millions for you?
Minimum = 5 million
Charges = 4% per year
$ DOLLARS
Private Bank:
Who can invest your P5,000 for
you, at low cost.
Mutual FUND. The “private bank”
for ordinary people.
Minimum = P5,000
Charges = 1.7% percent a year.
47
Mutual
Fund 1. You have
money.
2. You hire a
professional,
to manage it.
Unit Investment
Trust Fund: 1. BANK Trust
Fund, open to
the public.
2. You buy a
UNIT.
MUTUAL FUND
We “make” our
own insurance.
“Let’s pool
our money
and invest it.”
“Mutual” BENEFIT
49
Mutual
Fund
Unit
Investment
Trust Fund
OPERATED
BY A STOCK
BROKER
Sold by SALES
AGENTS
OPERATED
BY A BANK
Sold at bank
branches
Inflation, 4%
Track record
High returns, %
Safe (good credit) RISKY (uncertain)
“Save & Learn”
Fixed-Income Fund,
8% / year
“Save & Learn”
Balanced Fund,
17% / year
ALL
Bonds
Half
Bonds,
Half
Stocks
“Save & Learn”
Equity Fund, 23% / year
ALL
Stocks
Get Forms:
at www.fami.
com.ph
How to buy mutual funds
Get application forms at:
www.fami.com.ph
Invest 5,000
At 5 / share
1,000 shares
Buy MORE
shares, each
month
Buy 100K of
stocks, directly
Buy 100K of
mutual funds:
Pay P2000 now.
(2% of assets)
Pay P1700/year (1.7% of assets)
Like: Hiring a
“Driver”
Pay P 261 in commissions,
for the entire
trade.
With Stocks: With Mutual
Funds:
You ‘drive
your car.’
You decide
freely.
They ‘drive
your car.’
They decide
freely.
You get the stress They get the stress
Fixed-Income and
other Stocks
47%
Power
10%
Telecoms
7%
Holding
Companies
13%
Properties
21%
Transport
2%
• P 8 bn
• Growth -Oriented
• All Stocks
• For Aggressive Investors
Equity Fund 2006 Net Yield 67.58%
2007 Net Yield 12.62%
2008 Net Yield -30.70%
2009 Net Yield 53.11%
2010 Net Yield 63.37%
2011 Net Yield 8.18%
YTD Yield (8/23/12) 18.88%
CAGR 24.40%
FAMI “Equity Fund”
Stocks
49%
Bonds
26%
Deposits
24%
Others
1%
• P3 Bn
• Launched in May 2007
• For Long-term investment
• Moderate Returns
• A balance of stocks and bond investments
Balanced Fund 2007 Net Yield 4.07%
2008 Net Yield -4.86%
2009 Net Yield 45.36%
2010 Net Yield 61.97%
2011 Net Yield 6.62%
YTD Yield (8/23/12) 17.26%
CAGR 18.54%
To consistently
make money:
invest LONG-
TERM 57
Buy NOW Buy LOW
Sell HIGH
Wait
The principle is
the same:
The Objective
Adjust the percentages,
to suit your preferences.
__% in Stock market
MUTUAL FUND
__% in Stocks that you
will personally select and
monitor
A
B
C
D
E
F
The price moves from “cheap” to “expensive,” and
cheap again.
Company
Earnings = net
profits
BUY
BUY
SELL BUY
Take-home
pay 60
Take-home
pay
Forced
Savings!
Philippines Singapore
-Taxes -Taxes
-Voluntary Savings?
61
compounding
100 x 1.15 for 30 years
100 x 1.06 for 30 years
6,621
574
Why be “aggressive”?
Q: Why save, for years and years?
IF too conservative:
13,000
Strategy: buy as it
goes down…
Stocks have overshot their
Long-Term Average
6,700
1987 – 2012: 10%
2002– 2012: 20%
2012: 33%
2012-’17: 20%
1,200
6,000
Strategy: buy, IN
CASE it goes up.
Which is safer ?
A. to keep stock
certificates (paper)
B. electronic records
or “scripless”
Can be rendered
invalid by :
Termites
Flood
damage
Molds,
Mildew
Theft
Crayola of
baby
Paper
Certificate
Recognized by
Broker
Stock
Exchange
Securities
Clearing
Enough
‘Back-up’s
Stock
Transfer Svc
ELECTRONIC
RECORDS, have
back-up systems
& security
66
P100,000 P100,000
Buy your
own stocks Pay P1700
a year
Less stress w/ Stress
On your Own Mutual Fund