What should I invest in with my Tet bonus?

Le My, 25, received VND20 million (US$820) in Tet bonus this year.

She plans to give VND3 million to her family and save VND2-3 million for her travel fund, then invest the remaining amount.

Last year, My put her Tet bonus into a savings account as bank interest rates were over 8% per annum at that time.

This year, she is still hesitant as interest rates are falling sharply.

She, like many other people, is wondering where to invest the bonus money to avoid devaluation.

Le Thi Dieu My, head of customer services at Vietcombank Fund Management Company Limited (VCBF), suggests people consider the following steps.

To know how to manage the Tet bonus, the first thing to do is to assess your risk appetite based on your age.

Edward Jones, one of the top financial services providers in the U.S., advises that the higher your risk tolerance and the younger you are, the more you should focus on investing in higher-risk assets with high returns.

The expert suggests using this formula to calculate risk tolerance:

Risk Tolerance Ratio = (100 - your current age) x 100%

For example, a 30-year-old should have a risk tolerance ratio of (100 - 40) x 100% = 70%. This means 60% of their assets can be invested in higher-risk and potentially more rewarding options.

The second step is to identify current and future needs, and then plan ahead to balance income, spending, and savings.

The VCBF expert suggests the 50:20:30 rule to set up a budget for income and expenses, meaning 50% of your income should be used for essential living expenses, 20% for savings and investment, and the remaining 30% for leisure activities.

Next, explore investment channels after determining risk appetite and investment goals.

- Savings account. This is a familiar and safe choice with a stable earning, suitable for investors who do not accept high volatility. However, bank interest rates are at a record low of 4.5-5.5% per annum for 12-month terms.

- Gold. Gold is a safe way to prevent asset devaluation during unstable periods. This asset has high liquidity but does not have a fixed interest rate.

Over the past two years, gold prices have fluctuated more rapidly than before, often setting new records and then declining in very short timeframes.

Domestic gold prices also differ significantly from the world market and often experience opposite trends. Last year, SJC gold exceeded VND80 million per tael before quickly decreasing to around VND75 million.

- Stocks. Investing in stocks with long-term growth potential can be a good idea but requires time and knowledge, and is more suitable for risk-seeking investors.

According to experts, with the Vietnamese market currently being undervalued and prospects for economic recovery, now may be a good time to invest in stocks.

Besides directly investing in stocks, open-ended funds are an indirect and flexible way to invest and diversify your portfolio.

Open-ended funds are suitable for all investors regardless of their risk tolerance, require only a small amount of starting capital, and have high liquidity.

- Real estate. This is particularly suitable for those with long-term investment plans. However, it requires a large amount of capital and has low liquidity.

Currently, many market watchers believe that more time is needed for the real estate market to improve, house and land prices have decreased compared to before, but it is still difficult to filter out products with good legal and quality assurance.

According to the expert's view at VCBF, Vietnam's economy is showing many positive signs, such as reduced inflation and deposit interest rates, and has many drivers for growth.

Therefore, with an average Tet bonus of tens of millions of dong, stocks and open-ended funds are great choices for investment.

"In addition to the Tet bonus, any time you have idle money, you should invest as soon as possible," the VCBF expert added.

*The advice were translated into English by AI.