Which basket to put money in?
(Updated: March 12, 2008)
VietNamNet Bridge – 31.78% of 25,056 VietNamNet readers polled said they inject money in gold, suggesting it’s the most attractive investment channel now for individual investors.
Stocks prove to be the second most attractive investment channel for Vietnamese with 22.12% of readers declaring that they invest in stocks. 19.48% of investors inject money in the real estate market, while bank deposits, the traditional way of saving money for Vietnamese people, ranks fourth (9.86%). Only 7.65% of VietNamNet readers said that they buy dollars. Moreover, investors make investment in the service sector (4.03%), production (3.39%) and other sectors (1.68%).
Gold: the No 1 choice
Making investments in gold is now bringing fat profit to investors. In 2007, the gold price increased by 33-34%, and in the first two months of the year, the price rose by 11.3%. This means that investors who bought gold in early 2007 and sell now can get the profit of 50%, i.e. they sum of money they can get is 1.5 times higher than their initial investment capital.
Stock market: risky but attractive
On March 5, 2008, the VN Index was at the deepest low in the history of Vietnam’s stock market, at 583.4 points, while HASTC Index was 191.38 points. Experts said that prices were low enough to buy stocks, and their advice proved to be reasonable. The VN Index and HASTC Index rose to 640.14 points and 225.55 points, respectively, on March 7, 2008.
However, unlike gold investments, long-term investors are losing money. Those who bought stocks in early 2007 and selling now are suffering heavy losses. The prices of many share items have decreased by nearly 70% over the last year. ACB shares, for example, were trading at VND280,000/share in early 2007, but the price dropped to VND88,000/share on March 5, and increased only a little to VND108,400/share on March 7.
Real estate: high risks, fat profit
It is clear that making investments in real estate can bring fat profit, but requires long-term high capital; therefore, this investment channel is not suitable for everyone.
However, making investment in real estate proves to be very risky. From the beginning of 2007 to the days just before Tet, real estate prices saw 3-4 fold increases, which could bring attractive profit to investors. However, the prices have been decreasing since Tet. Anyway, analysts said that there are still many opportunities to earn money with real estate investments.
Interest rates up, make short-term deposits, borrow long-term money
The VND interest rate has hit the record high in Vietnam’s banking history. Several banks offered the interest rates of 14.5% per annum. Currently, the popular interest rate is 12% per annum. In the context of the stock market’s falls, and real estate stagnancy, opening bank deposits proves to be suitable for investors who do not want risks.
As banks are now offering higher interest rates for shorter-term deposits, it would be more profitable to make short-term deposits.
US dollars: not a good choice
The greenback is devaluating in all international markets, including Vietnam. One dollar could be converted to VND15,560/US$1 on the black market on March 8, a dramatic decrease from the VND16,000/US$1 threshold seen one month ago.
Experts all say that the dollar will decrease further in value due to the profuse supply. It is clear that those who invested in dollars in the last time could not get the desired profit, and there are not many opportunities to earn money with dollar investments.
However, as Vietnamese people still fear that the VND will lose its value due to the high inflation, they are still keeping dollars under their pillows.
The wisest investors, according to experts, are those who don’t put all eggs into one basket.
(Source: VietnamNet)