How much do I need to Invest?

The amount of money you need to start investing is determined using a board lot system. This is basically table that plots the minimum number of shares an investor can buy or sell at a specific price range. Therefore, the minimum amount of initial investment varies and will depend on the market price of the stock as well as its corresponding board lot. Prices of stocks move through a scale of minimum price fluctuations.



The Philippine Stock Exchange uses the following Board Lot Table.

The Market Price (1st column) shows the range of stock prices that can be bought in the market. The Tick size (2nd column) shows the minimum increments that a stock price can change. And the Lot size (3rd column) shows the minimum number of shares that you can purchase within that Market price range.


Let's use, for example Globe Telecom (Stock code: GLO) with its closing price as of July 16 at P 1,133.00. Now check the first column of the board lot to verify which price range it falls. 


As you can see, it falls in the range of 1000.000 to 1999.000 (13th row). The tick size (2nd column) suggests that its prize can increase to P1, 134 or decrease to P1, 132 (+/- 1 peso). The lot size (3rd column) shows that you can purchase a minimum of 5 shares per transaction. Therefore, you can start investing at Globe Telecom's stocks if you have at least P5, 665, plus of course, some transaction fees. 


The section How to compute transaction fees explains how much an entire transaction would cost if you are to use the services of a broker.


If the price of GLO drops to, say, P995, it now falls under the "500.0000 to 999.5000" range, which means the minimum number of shares that can be traded now becomes 10.




What is an "Odd Lot"?


An “odd lot,” by definition, is an amount of a security that is less than the normal unit of trading for that particular security. It is also called broken lot or uneven lot. 


This scenario often happens when a company issues stock dividends rather than cash dividends. Stock dividends increase the number of a stocks owned by a shareholder.


Say Ayala Corporation (Stock Code: AC) decided to issue a 5% stock dividend. If you currently own 500 shares of AC, you will get an additional 5% of your stock holdings, that is, an additional 25 shares for a total of 525 shares.


The minimum board lot for AC (with July 17 closing price of P458) is 10 shares. You can thus sell 520 shares of AC in a normal transaction, but the remaining 5 shares will be considered an odd lot.


You can still sell odd lots but you might need to pay a higher commission rate compared to round-lot trades or it might be sold at a relatively lower price than the current market price.