The BPITrade Settlement Account: BPI Direct Savings Bank

BPI Direct new maintaining average daily balance

The BPITrade announcement

BPI TRADE LOWERED THE MONTHLY MAINTAINING Average Daily Balance of BPITrade settlement account with BPI Direct Savings Bank, says the email advisory it sent out to clients:

--- On Thu, 4/23/09, bpitrade@bpi.com.ph wrote:

From: bpitrade@bpi.com.ph
Subject: BPI Trade Settlement Account
To: Marginal Investor
Date: Thursday, April 23, 2009, 4:12 PM

Dear BPI Trade clients:

Greetings!

Please be informed that the monthly maintaining Average Daily Balance (ADB) of your BPITrade settlement account with BPI Direct Savings Bank has been lowered from P5,000 to P500.00. As a non-ATM deposit account, the BPITrade settlement account will earn interest as follows:

Interest Rates (per annum)
If daily balance is:
PhP 0 - 499 0.000% p.a.
PhP 500 and above 1.750% p.a.

Please visit the FAQs on the BPITrade website for more information.

Thank you.


BPI Trade Team

Visting the BPITrade FAQs

Following the suggestion, we visited the FAQs page on the BPITrade website for more information:

"What is the minimum investment required to open a BPITrade account?

There is no minimum investment required to open a BPITrade account. However, before you can purchase shares of stock, fixed income securities, or mutual funds, you must first deposit funds into your BPITrade Bank Account. The BPITrade bank account ("Settlement Account" maintained with BPI Direct Savings Bank) requires an Average Daily Balance of only PhP 500.00 (emphasis by Marginal Investor)."

 

Good for starter stock traders

This development is a boon to the beginning stock trader. First, it decreases the time required to accumulate sufficient funds for starting your first stock trading operating cycle. Second, it contributes to the much needed liquidity or cash position of the beginning stock market investor.

For those familiar with the game plan proposed in my earlier posts How to Build Equity for Your Speculative Stock Trading and Finding the Money for Investment, we said that for one who saves a minimum of 275 pesos monthly or on the average 2% to 3% of his or her monthly salary or earnings, we need a year to accumulate funds for opening and maintaining a BPI Expressteller Savings Account.

With the lowered monthly maintaining ADB of a BPITrade Bank Account, it would now make sense to open a BPITrade Account in just over a year of saving money, and place our first stock market buy order in under two years of accumulated savings. Third year into our savings program, we are already warming up on the stock trading game, and well on our way to converting our stock trading profits into a more secure investment vehicle like investment funds.

Measuring Our Stock Trading Profit

The Starter Investor Measures Trading Performance

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

KEEPING TAB OF OUR TRADING PROFIT is more about tracking our success in the stock trading game. But how do we measure our accomplishments?

Reinvestment

"In a continuous program" says Benjamin Graham, the author of The Intelligent Investor: The Classic Text on Value Investing, "no market profit is fully realized until the later reinvestment has actually taken place."

Trading profit

In more concrete terms, the "true measure of the trading profit" Graham says in Chapter Two entitled The Investor and Stock-Market Fluctuations, "is the difference between the previous selling level and the new buying level."

For illustration, let us use the completed stock trading operating cycle mentioned in a previous post on  BPITrade Updated Fee Structure:

This shows a trading profit of almost 8 percent based on our previous total sell price. Just maintain similar results in the next 9 to 12 stock trading roundtrips and you are on your way to doubling your money probably.

Buy Stocks or Hold Cash in High Market Levels

The Starter Investor Buys Stocks

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

DECIDING TO PUT YOUR MONEY IN STOCK OR KEEP YOUR CASH ON HAND during high market levels may not be an easy task for the marginal investor.

But the following insight should help: "On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is higher than can be justified by well-established standards of value" says Benjamin Graham in Chapter Two of his book The Intelligent Investor: The Classic Text on Value Investing.

Sometime in February 2007, we needed to make a choice between keeping our cash on hand or making an investment and buying 10 shares of Ayala Corporation at 630 pesos per share when the general market level is high by my reckoning.

Deciding to invest in stocks

Keeping the money with me will expose my funds to the greater risk of tempting alternatives like buying a digital camera, eating out and going shopping, or enrolling in that short course for a home-based business. I ended up buying the Ayala Corporation stock and assuring myself that it is better to have a long-term investment and a possible paper loss of 50 percent that can be fully recovered over time than no investment at all.

Stock and cash dividends

By the end of March 2009, I had received 4 shares for stock dividends, about 137 pesos for cash dividends, and 128 pesos for value of fractional shares from the stock dividend.

Based on the closing price of 206 pesos, the nominal valuation of my investment portfolio is about 3,150 pesos. The total cost, however, of my investment including BPITrade upliftment fee is 6,515 pesos. This meant I had a paper loss of nearly 52 percent.

Precisely, my paper loss is almost the value approximated by Benjamin Graham that an investor may experience in a well-defined bear market.

Therefore, so long as there is no "convincing indication that the underlying values have been permanently affected" - this Starter Investor has no worries.