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POSTED ON November 26, 2019

How finance folk use it

The Philippine Stock Exchange Index (PSEi) is a number that represents the general health of the local stock market. It gets the value of 30 stocks that experts consider representative of the market because most activity involves them.

The actual computation for the PSEi is a bit complicated but the idea is that if it rises, then most of those stocks are going up in value. Just take note that the 30 stocks move independently.  

Is it good or bad?

The PSEi can help guide your investment decisions if you intend to find a good time to invest. If you’re interested in specific stocks, then the PSEi won’t be enough. You’ll have to go more in-depth into the companies themselves – how they’re doing, what their future plans are, etc.

What it means for you

When the PSEi is down, it might be a good time to start investing because it’s a chance to invest in stocks that have lowered in value. When the value of those stocks goes up again, then your investment will also grow.

It is possible for the PSEi to continue going down after you invest. In cases like this, the index may still recover, especially in the long term.

Besides buying the stocks included in the PSEi, you can also invest in a unit investment trust fund (UITF), mutual fund, or exchange-traded fund. Many banks and companies design these funds to track the movement of the PSEi. So, instead of buying those 30 stocks individually, it’s like you’re invested in all of them at once.