Experts advise investing money in knowledge, setting up a reserve fund, buying life insurance and learning about financial investments.
I am a man, 29 years old, married. My wife stays at home to take care of our 6-month-old baby. My main job is a secondary real estate agent. With the current situation, my income is not as good as before, around 15-20 million VND per month.
I have about 350 million in bank deposits. Regarding housing, my husband and I are the youngest so we are still living with our parents in Ho Chi Minh City. Our main expenses are for ourselves and the baby.
With the current situation, should I learn more about other investment markets to have more income? I am still confused about what type of investment, hope to get advice from experts.
Thanh Cuong
Investors are watching the board at a stock exchange in District 1 (HCMC), March 2021. Photo: Quynh Tran
Consultant:
An individual's income usually comes mainly from labor (active income) and investment (passive income). Finding an investment channel is necessary for everyone and needs to be suitable for their financial situation and investment experience.
Your current job fluctuates with the economic cycle, so you should find ways to increase your income or do another job that is more stable for a source of active income. The above solutions may require additional knowledge, so you need to prepare a budget for studying or improving your professional qualifications. Investing in yourself is also an effective and sustainable investment channel.
Besides, a stable income also helps you access cheap capital from banks. With the advantage of being a real estate agent, when you have a stable income, you can borrow a sum from the bank to invest in the real estate channel.
In addition, you need to have a financial protection plan for your family with two solutions: setting up a reserve fund and life insurance products.
The reserve fund is usually equivalent to about 3-6 months of essential family expenses (6 months if there is no life insurance). This amount will be deposited in long-term savings at the bank. For example, if you live in a big city like Hanoi or Ho Chi Minh City, the average cost for a family of two, a husband, a wife and a child is about 16 million. You need to create a reserve fund of 48-96 million and divide it into 1 and 6-month deposits at the bank. This amount will be used when you have problems affecting your income or when there is a health emergency and you need money to pay.
You are currently the breadwinner of the family and have two dependents. The family's income comes only from you, so you need to have a life insurance contract for yourself. A life insurance contract is an additional source of finance when a risk arises to your health - the only source of finance for the family is lost. An insurance consultant will advise on the total value of protection in accordance with your financial goals, from which you will know the amount of insurance you need to participate in annually. After having insurance, the above financial reserve fund can be set up for 3-4 months of expenses.
Thus, the idle 350 million VND will be prioritized to set up an education fund, an emergency reserve fund, and buy a life insurance contract. The remaining amount can be invested. Effective investment requires experience and knowledge. Therefore, you should learn more about personal finance to be able to build an investment plan that suits your finances.
In addition to the deposit and real estate investment channels, you should learn about financial investment channels, stocks and bonds. You can refer to the form of open-end fund certificate investment recognized and protected by Vietnamese law. Fund management companies must be licensed by the State Securities Commission and operate in accordance with the law, so the risk of fraud will not occur. The fund management company will analyze and make investment decisions for you in a portfolio of 20-30 stocks. In addition, funds always have a supervising bank that will hold and protect your assets. Open-end fund certificates are investment products that minimize risks for newcomers to the stock market and are very suitable for people with busy jobs.
Phan Hoang Quan
Personal Financial Planning Expert
FIDT Investment Consulting and Asset Management Company
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