What investment channels are suitable at this time?

Gold prices tend to fall rapidly and are unpredictable, making this investment channel the least attractive for capital.

A comparison of the three investment channels—gold, stocks, and savings deposits—since the beginning of 2014 shows that the return on investment from gold is less than half that of savings deposits. At the beginning of 2014, the domestic gold price closed at 34.95 million VND/ounce for buying and 35.02 million VND/ounce for selling.

By the end of October 20th, the price of gold had only slightly increased to 35.74 million VND/ounce for buying and 35.86 million VND/ounce for selling. Thus, the price of gold in the first nine months of 2014 only increased by about 2.2%.

Even when domestic gold prices reached their highest level since the beginning of the year (May 20th), the increase in gold prices was only 6.08%, lower than the deposit interest rate at the same time.

Meanwhile, savings interest rates have been continuously decreasing since last year. Currently, deposit interest rates at banks for terms of 12 months or more range from 6% to over 7% per year, with the highest rate being over 7.5% per year for a 36-month term. For a one-month term, depositors receive the lowest rate from banks, around 4% per year.

Stocks are a highly attractive investment channel, but they require long-term investment. (Photo: KT)

Compared to investing in gold, the nominal rate of return (without accounting for inflation) from savings deposits is about three times higher. However, stocks are the most attractive investment channel when viewed from a long-term perspective.

Specifically, as of the end of the trading session on October 20th, the VN-Index had increased by nearly 17% compared to the beginning of the year. If calculated at the market peak reached in early September, the stock market has increased by as much as 27%. With this increase, investing in listed stocks has outperformed the other two investment channels. Of course, the specific investment performance depends on the selection of the stock portfolio.

Each investor has their own choice of investing in different channels, and more importantly, each investment channel is selective about its investors. Especially stocks, although attractive due to their high returns, also come with many risks, including market risk, as was the case in May.

Gold prices tend to fall rapidly and are unpredictable, making this the least attractive investment channel among the three mentioned above. Conversely, savings deposits are considered an effective solution for many people, due to their high safety and acceptable (unlikely to decrease further) low return in the current context.

According to the Investment Forum