SESSION 5-Stocks & REITs PDF

Common Stocks, Preferred Shares & REITs RO B E RT O M AR CO N. S AM S O N M BA, E S S , C I S , F I MS , C TP , C US P , C FM P Session Objectives What assets are listed in the Philippine Stock Market? What are the characteristics of each asset? Incorporating Equities & REITs in...

Common Stocks, Preferred Shares & REITs RO B E RT O M AR CO N. S AM S O N M BA, E S S , C I S , F I MS , C TP , C US P , C FM P Session Objectives What assets are listed in the Philippine Stock Market? What are the characteristics of each asset? Incorporating Equities & REITs in your portfolio About Myself MIN Relationship Manager, Unionbank, Private Banking Dept. S.E.C. - Licensed Equities Securities Salesman (ESS) S.E.C. - Licensed Certified Investment Solicitor (CIS) S.E.C. – Licensed Fixed Income Market Salesman (FIMS) TIFP – Certified Trust Professional (CTP) T.O.A.P. – Certified UITF Sales Personnel (CUSP) Bloomberg - Certified Financial Markets Professional (CFMP) Regular contributor to ANC 24/7 News Channel & Bloomberg PH TV Part-Time Professor at the Ateneo de Davao University, Graduate School Accredited Program Instructor at the ADDU Academy of Lifelong Learning Master’s in Business & Administration graduate, Ateneo de Davao University BS – Industrial Engineering graduate, Ateneo de Davao University Managerial & Organizational Leadership specialist, Golden West College (California, USA) What is a Stock Market? The stock market is made up of investors buying, selling, and trading shares of companies, reflecting these firms' collective value and performance. A tool used by corporations to raise capital needed for expansion, acquisition, refinance debt, or more. An avenue for investors to own portions of different publicly-listed companies  The Philippine Stock Exchange The Philippine Stock Exchange, Inc. (PSE) is a self-regulatory organization that provides and ensures a fair, efficient, transparent and orderly market for the buying and selling of securities. The Exchange also offers a convenient and efficient venue in raising capital to support the growth of businesses. Considered one of the oldest bourses in Asia, the PSE traces its roots back to the country’s two former bourses – the Manila Stock Exchange (formed in 1927) and the Makati Stock Exchange (formed in 1963). The Manila and Makati bourses were unified on December 23, 1992 to form the PSE. In 2018, the PSE moved its headquarters to Bonifacio Global City (BGC) in Taguig. The fast-paced environment in the Taguig business district is well-suited for the Exchange as it aims to fast track the introduction of new products and services to boost investor participation and liquidity in the Philippine stock market. Source: PSE website  What’s in the PSE? Assets available in the PSE: Common Stocks Preferred Stocks Real Estate Investment Trusts (REITs)  Common Stocks Common stock is a security that represents ownership in a corporation. In a liquidation, common stockholders receive whatever assets remain after creditors, bondholders, and preferred stockholders are paid. There are different kinds of stock traded in the market: value stocks are lower in price in relation to their fundamentals and growth stocks are in companies that tend to increase in value due to increasing earnings.  Common Stocks Investors can buy common shares via the Primary Market (IPO) or the Secondary Market (Stock Market). Investors typically make money via Capital Appreciation (Growth) or Dividends (Income). A well-diversified portfolio contains stocks from different industries and sectors.  Preferred Shares Preferred shares are company stock with dividends that are paid to shareholders before common stock dividends are paid out. Preferred shares are ideal for risk- averse investors and they are callable (the issuer can redeem them at any time). Investors also have the option of selling the shares in the secondary market. Real Estate Investment Trust (REIT) A stock corporation established principally for the purpose of owning income-generating real estate assets, such as apartment buildings, office buildings, medical facilities, hospitals, hotels, resorts, highways, warehouses, shopping centers, railroads, among others. It is a type of investment instrument that provides a return to investors derived from rental income of the underlying real estate asset. Returns are distributed to the investors in the form of dividends. Real Estate Investment Trust (REIT) REITs are required by law to pay at least 90% of its income as dividends, although, the dividend rate will depend on the REITs’ income. Dividends may be in the form of cash, property, or stock dividends.  How To Buy These Assets? RETAIL: Open a Stock Brokerage Account. Select from the many online brokers available. Consider the tech, aftersales, etc. CORPORATIONS: Open a Stock Brokerage Account or via a Trust Account  What to Consider? The Stock Market is volatile, with fluctuations that may range higher than other assets The Stock Market is also affected by public emotion, foreign fund inflows, economic performance, and more Over the long term, the Stock Market moves upward with a CAGR of approx. 8% per annum. If seeking higher yields, prepare to devote more time. If seeking close to CAGR yield,s, you can relax. Quick Guide on Fixed Income Instruments Stocks are typically used for risk- taking investment activities The younger you are, the more appropriate stocks may be for you Investors seeking fixed income returns may still consider stocks Research the company you wish to invest in, or consider an Index Fund Ensure proper diversification when investing in Stocks Parting Thought For Session 6 Asset Allocation: The Right Way