Financial Risk Management Practices on Stocks Investment of Selected Online Brokers of Philippine Stocks Exchange

Abstract

Investing is still not a big thing for most Filipinos, as we are not a fan of delayed gratification. Majority of the working population live in the now, not preparing for the future, though there are already a lot of investment instruments that are readily available in the market such as mutual funds or insurance, stocks, treasury bills and bonds. The most obvious reason would be the low income of many of our citizens, having no extra cash to spare, making investing impossible. We can also accept the fact that most of the Filipinos lack knowledge and awareness in terms of different investment options. The research shall gather specific information from active investors of selected online stock brokerage firms regarding the financial risk management practices they usually use on stocks investing. As we all know, the main objective of investing is to gain financial return. Apparently, every investment has an expected risk, which would always be true for nonguaranteed investments such as stocks. Managing these identified risks thru thorough assessment could lessen the impact of potential loss to one’s investment. Purposive sampling was the sampling technique used for this study to validate this research. With consideration to the scope and limitation of this study, the respondents were mainly from the pool of investors investing from the Philippine Stocks Exchange, Inc. Only 109 investors were surveyed as samples for the actual study. Results indicate that the Level of Effectiveness of Financial Risk Management Practices used in this study, according to aspects such as Market Risk, Financial Risk, Business Risk and Portfolio Risk were all ‘Effective’. Moreover, investors are recommended to apply the risk management practices as identified in this study per aspect as these practices are deemed effective and could lessen investment risk. It is also advisable that investors continue to be updated with the current news in the stock market and should always find time to do their necessary research with their own investments.