(Consultant) What to do with 300 million idle VND?

Experts recommend saving 60-120 million, the rest should be invested in stocks and bonds at a ratio of 70/30.

I live in Ho Chi Minh City, work as an interpreter. I have about 300 million VND in idle money but don't know what to do to make a profit.

I used to save money, but now I don't find it attractive anymore. I feel that this amount of money is quite small. But I still hope that experts can advise me on where to invest it to generate sustainable and better profits.

My Phan

An employee is counting customers' deposits at a bank. Photo: Thanh Tung — An employee is counting customers' deposits at a bank. Photo: *Thanh Tung*

Consultant:

First, you need to maintain an emergency fund worth 3-6 months of your income in the most liquid form of assets such as cash or short-term savings deposits. This is to prevent risks that may occur in the future.

For the remaining amount, you can choose other investment asset classes with higher profitability. Note that choosing the right investment asset depends on factors such as investment goals (wanting to preserve capital, wanting a steady income stream or wanting to grow assets), investment time, expected profit along with risk tolerance and willingness to accept risk.

Let's take a look at some popular investment asset classes.

First is gold . According to statistics, if you hold gold from 2010 to 2022 (12 years), the average annual return will be 5.8%. The world gold price over the past 100 years has not necessarily brought very attractive returns. Therefore, gold should be considered a good defensive asset during periods of economic crisis or major geopolitical instability, when confidence in the national or world monetary system is reduced. Gold is also a good asset against inflation, highly liquid but not safe to store and has a high volatility.

Next is bonds . When investing in a certain bond, the investor has skipped the intermediary step of the bank and directly lends money to the business. Therefore, we will expect a higher profit than savings deposits, usually from 1% to nearly 6% depending on the type of bond and the creditworthiness of the issuing organization. Higher profits will of course come with more risks, specifically the risk of losing capital if investing in bonds of poor quality companies. Another safer way is to pay a fee for professional investment funds to invest in the corporate bond market. Most funds have a strict investment process with many advantages, which can minimize risks in the process of investing in corporate bonds. Investing through funds can also bring a higher expected yield than saving.

Regarding stocks , since its inception, the main index of the Vietnamese stock market is the VN-Index, bringing an average profit of 12.6% per year. This is a very attractive number compared to savings. However, it comes with high risks and fluctuations because the stock market is very cyclical. This channel is affected by macro factors such as the world economic cycle, domestic economic cycle, currency cycle; as well as more micro factors such as the business cycle of each industry and each enterprise. Investing in stocks also requires knowledge, experience, information and time to be able to invest effectively. Similar to bonds, you can also entrust a professional investment unit such as investment funds to participate in this asset class.

There is also a very popular asset class for Vietnamese people, which is real estate . Real estate is a type of asset with very high risks, especially liquidity risks or legal risks, and also requires a lot of capital to invest. However, real estate has the characteristic of retaining and increasing value well when participating in the long term, especially in countries with young populations and a rapidly growing middle class like Vietnam. Real estate can also generate a steady stream of income when rented out.

In short, in your case, I temporarily assume that your monthly income is 20 million VND and you are in your 30s, with an average risk appetite. Save 60-120 million VND in the form of savings deposits. The remaining assets can be allocated 70% to stocks and 30% to bonds, which can be invested by yourself or through investment funds.

Pham Le Duy Nhan

Head of Portfolio Management
Vietcombank Fund Management Company (VCBF)

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