What to do with your Tet bonus?

Tet bonuses are like spare cash at the end of each year; if you choose a good investment channel that suits your budget and goals, it can generate effective returns.

Le My (25 years old) has been working as an engineer for a foreign chemical company in Ho Chi Minh City for over two years. Having received a Tet bonus equivalent to one month's salary, nearly 20 million VND, she plans to give 3 million VND to her family, and allocate 2-3 million VND to a travel fund. The remaining money, My intends to save for savings or investment.

Last year, My chose to put her money in a savings account because at that time, bank interest rates had risen above 8% per year. This year, she's still hesitant because interest rates are falling sharply. "For people like me who are only used to saving money in a bank account, the question now is where to put my bonus money to avoid devaluation," she shared.

Like Le My, many people are still unsure what to do with their Tet bonus. Although the amount may vary, the common point of this money is that it's surplus income for each worker, which can be considered idle money at the end of the year. Therefore, besides spending on oneself and family, Tet bonus is an ideal capital to accumulate and invest.

According to Ms. Le Thi Dieu My, Head of Customer Care at Vietcombank Fund Management Company (VCBF), the first step in knowing how to manage Tet bonuses is to assess your risk tolerance based on your age. Ask yourself: What age are you and what stage of financial planning are you in?

The table below lists the stages of each individual's life and their appropriate risk tolerance at each stage. This is advice from Edward Jones, one of the leading financial services companies in the United States.

(Stages in life:)
- Teenager: recently graduated from university, started their first job, not yet married.
- Stability: a stable job and building a family.
- Development: high and stable income, building a financial plan for children.
- Middle age: financial planning for retirement
- Retirement: to retire)

Ms. My suggests using the following formula to assess your risk appetite:

Risk acceptance rate: (100 - current age) x 100%

For example, if your age is 30, your risk tolerance would be (100-30) x 100% = 70%. Therefore, you can allocate 70% of your income to high-risk assets with high expected returns.

The second step is to identify current and future needs, and then create a plan to balance income, expenses, and savings. Each person can set goals for the new year, answering the questions: What do I need? When do I need it? How much money do I need to achieve that goal?

VCBF experts suggest using the 50:20:30 rule for budgeting. This rule allocates 50% to essential living expenses, 20% to savings and investments, and the remaining 30% to activities such as entertainment, travel, and courses.

A transaction at a bank in Ho Chi Minh City. Photo: Thanh Tung

Next, explore investment channels after determining your risk tolerance and investment goals.

First, there's the option of depositing money in a savings account . This is a fairly familiar and safe choice with stable interest rates, suitable for investors who don't accept high volatility. However, it's worth noting that bank interest rates are currently at record lows, with 12-month terms only around 4.5-5.5% per year.

Secondly, gold has traditionally been considered one of the safest and most reliable investment channels, used as a way to protect asset value during times of uncertainty or economic crisis. This form of investment offers high liquidity but lacks a fixed interest rate. Over the past two years, gold prices have fluctuated more rapidly than before, repeatedly setting new records only to fall again in a short period. Domestic gold prices also differ significantly from world prices, often showing inverse trends. At the end of last year, SJC gold exceeded 80 million VND per tael but quickly retreated to around 75 million VND.

Thirdly, there's the stock market. Investing in stocks with long-term growth potential can be a good idea, but it requires time and knowledge. This form of investment is for investors willing to accept high risks. According to analyses from many securities companies, the Vietnamese market is currently undervalued compared to the past. With many prospects for overall economic recovery and corporate profits, now can be considered a good time to invest in stocks.

Besides direct investment, mutual funds are becoming a popular form of indirect investment. This offers flexibility and helps diversify investment portfolios. This form of investment is suitable for everyone, from those with low to high risk tolerances, with small investment capital and high liquidity. However, investors need to carefully select funds with good performance, suitable investment strategies, and reasonable fees.

Finally, there's real estate . The real estate market can offer good diversification, especially for those planning long-term investments. However, the drawbacks include the need for large capital and low liquidity. Currently, many market observers believe that more time is needed for the real estate market to thaw; while house prices have decreased compared to before, it remains difficult to find properties with sound legal standing and good quality. Overall, the real estate market will continue to focus primarily on the segment with genuine housing demand.

According to VCBF experts, Vietnam's macroeconomic balance is showing many positive signs, with reduced inflation and exchange rate risks, and the economy has many drivers for growth. Therefore, with the average Tet bonus amount of tens of millions of VND, investors can allocate it to the stock market or indirectly through open-ended funds.

Currency will depreciate due to inflation, but investment assets will not; if you choose the right channel, they will generate profits, causing your assets to continuously grow. "Besides Lunar New Year bonuses, you can invest any spare money you have as soon as possible," the VCBF expert added.

Tat Dat

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