- Stocks: Unlimited growth potential. The VN-Index has increased 1,075% over the past 20 years (2003-2023), equivalent to about 13.5% annually. Some individual stocks are even more impressive – like MWG (The Gioi Di Dong) increasing more than 1,500% since listing.
- Bonds: Stable, predictable returns. Vietnamese government bonds have interest rates of 3-5%, while corporate bonds yield 8-12% annually, significantly higher than bank deposit rates (currently around 3-4.5%).
- During the 2019-2024 period, although stocks fluctuated strongly with many up-down cycles, the average return was still higher than bonds, but accompanied by large fluctuations and periods of deep decline (such as Q1/2022 when the VN-Index fell more than 19%).
Pocket Option - Comparing stocks and bonds for modern Vietnamese investors
Understanding the comparison between stocks and bonds is an important foundation for successful investing in Vietnam. The article provides a detailed analysis of advantages-disadvantages, profit potential, and strategies for combining these two popular investment tools in the context of Vietnam's economy in 2025.
Vietnam’s financial market is developing at a dizzying pace, raising an urgent question for investors: should they choose stocks or bonds? In 2024, with the VN-Index fluctuating strongly and the corporate bond market gradually recovering after the crisis, understanding the comparison between stocks and bonds becomes more important than ever. This article will help you comprehensively analyze these two investment instruments, providing a practical perspective for modern Vietnamese investors.
Nature and basic characteristics: Comparing stocks with bonds
Before diving into detailed analysis, we need to understand the nature of each investment instrument when comparing stocks with bonds.
Stocks – Partnering with businesses
Stocks are not simply securities – they are certificates of ownership in a company. When you buy VHM shares of Vinhomes or FPT shares of FPT Corporation, you become an actual owner of the business with voting rights at shareholder meetings and dividends from profits. Vietnam’s stock market with its two exchanges HOSE and HNX has developed for over 20 years, currently with more than 1,600 listed codes trading daily.
Bonds – Lending money to businesses
Bonds are debt instruments – when you buy bonds, you lend money to the issuing organization with a commitment to pay periodic interest and return the principal at maturity. Vietnam’s bond market currently has government bonds (safe, 3-5% interest rate) and corporate bonds (higher risk, 8-12% interest rate). Since the Tan Hoang Minh and SCB events in 2022, the bond market has been more tightly managed with Decree 65/2022/ND-CP.
| Criteria | Stocks | Bonds |
|---|---|---|
| Legal nature | Certificate of ownership (equity) | Certificate of debt (debt instrument) |
| Investor rights | Dividends (not fixed), voting rights | Fixed interest rate, no voting rights |
| Investment term | Unlimited time | Specific term (1-30 years) |
| Payment priority | Paid last when business dissolves | Prioritized for payment before shareholders |
Profits and risks: Comprehensive analysis comparing stocks and bonds
An important aspect in comparing stocks and bonds is assessing profit potential and risk levels.
Profit potential
Historical data from the Vietnamese market shows a clear difference:
| Year | VN-Index | Government bond interest rate (10 years) | Corporate bond interest rate (average) |
|---|---|---|---|
| 2020 | +14.9% | 3.5% | 8.5% |
| 2021 | +35.7% | 3.2% | 8.7% |
| 2022 | -32.8% | 4.1% | 9.5% |
| 2023 | +12.2% | 4.5% | 10.2% |
| 2024 (Q1-2) | +5.7% | 3.8% | 9.8% |
Risk management: Decisive factor when comparing bonds and stocks
When comparing bonds and stocks, the risk factor is a key difference that every Vietnamese investor needs to understand:
- Stocks: High risk with price fluctuations that can reach 5-7% in a single trading session. After the COVID-19 pandemic, the VN-Index fell 43.15% from its January 2022 peak to November 2022 bottom, causing major losses for investors.
- Bonds: Considered safer, but not without risk. The 2022-2023 bond crisis with defaults by Tan Hoang Minh and Van Thinh Phat caused many investors to lose everything. Since then, Vietnam has improved the legal framework with Decree 65/2022/ND-CP tightening issuance and the amended Securities Law.
- Inflation risk: Bonds are negatively affected when inflation rises high, while stocks of companies that can reprice their products can be effective “shields” against inflation.
| Risk type | Stocks | Bonds | Countermeasures |
|---|---|---|---|
| Market risk | High (fluctuations up to 30-40%/year) | Medium (fluctuations 5-10%/year) | Proper asset allocation according to age |
| Inflation risk | Medium (can be a shield against inflation) | High (real value decreases when inflation increases) | Invest in stocks of essential goods sectors |
| Liquidity risk | Low (with blue-chips like VCB, VHM, FPT) | High (especially with corporate bonds) | Prioritize highly liquid instruments |
| Default risk | Not direct (but price can go to 0) | Direct (possibility of losing both principal and interest) | Carefully evaluate the issuing organization |
Liquidity: Decisive factor in comparing stocks and bonds
The ability to quickly convert to cash is a top priority for many Vietnamese investors when comparing stocks and bonds:
- Stocks: High liquidity, especially large-cap stocks (VN30). The average trading value on HOSE reaches 15-20 trillion dong per session (equivalent to 600-800 million USD), allowing investors to easily buy/sell.
- Bonds: Significantly lower liquidity. The secondary trading market is underdeveloped, forcing many investors to hold until maturity. If you need money urgently, you may have to accept selling at a high discount.
- Trading platforms like Pocket Option provide tools for trading both these asset types with better liquidity access, helping investors be flexible in their investment decisions.
| Liquidity criteria | Stocks | Bonds |
|---|---|---|
| Trading time | T+2.5 (receive money after 2.5 days) | Usually 1-7 business days, depending on partner |
| Trading volume | High (15-20 trillion VND/day) | Low (500-1000 billion VND/day) |
| Transaction costs | 0.15-0.35% of transaction value | 0.5-2% of transaction value or fixed fee |
| Ability to sell partially | Easy (from 10 shares) | Difficult (usually must sell entire lot) |
Balanced investment portfolio: Combining stocks and bonds
Rather than focusing only on comparing stocks with bonds to find a “winner”, top Vietnamese financial experts like Mr. Dominic Scriven (Dragon Capital) or Mr. Tran Dang Khoa (SSI) all recommend combining both:
At Pocket Option, we have analyzed thousands of investment portfolios of Vietnamese customers and found that portfolios diversified between stocks and bonds deliver the best long-term performance with significantly lower volatility.
| Life stage | Stocks | Bonds | Cash/other | Reason |
|---|---|---|---|---|
| Young investors (25-35 years old) | 70-80% | 10-20% | 5-10% | Long time ahead, can bear higher risk |
| Middle-aged investors (35-50 years old) | 50-60% | 30-40% | 5-15% | Balance between growth and capital preservation |
| Preparing for retirement (50-60 years old) | 30-40% | 50-60% | 10-15% | Prioritize capital preservation, reduce risk |
| Retired (over 60 years old) | 20-30% | 60-70% | 10-20% | Focus on stable income, capital safety |
The popular asset allocation formula in Vietnam from VFM consulting firm is: “115 – Your age = % stocks”, adjusted to suit Vietnam’s developing market conditions and higher growth potential compared to developed markets.
Impact of macroeconomics: Comparing common stocks and bonds
When comparing common stocks and bonds, one cannot ignore the impact of macroeconomic factors, especially in the context of Vietnam’s current economy:
Interest rates and economic cycles
The monetary policy of the State Bank of Vietnam affects the two asset types differently:
- When interest rates rise: During 2022-2023, the SBV increased policy rates to control inflation. Consequence: existing bond prices fell (new buyers want higher interest rates); the stock market also declined as capital costs increased and money flowed into bank savings.
- When interest rates fall: From Q4/2023 to 2024, the SBV continuously reduced policy rates. Result: existing bond prices increased; the stock market recovered thanks to lower capital costs and money shifting from savings to investment.
- During periods of high economic growth (such as 2023-2024 with Vietnam’s GDP growing 6-8%), stocks typically outperform bonds.
| Macroeconomic factor | Impact on stocks | Impact on bonds | Example in Vietnam |
|---|---|---|---|
| High GDP growth | Strongly positive (↑↑) | Neutral to slightly positive (→↑) | 2022-2024: GDP 6-8%, VN-Index strongly recovered |
| Rising inflation | Negative short-term, neutral long-term (↓→) | Clearly negative (↓↓) | 2022: CPI 4.5%, bonds decreased in real value |
| Decreasing interest rates | Positive (↑) | Positive for existing bond prices (↑) | 2023-2024: SBV lowered interest rates, stock market recovered |
| Rising USD/VND exchange rate | Beneficial for export businesses, disadvantageous for importers (↑↓) | Negative for VND bonds (↓) | 2023: USD/VND increased 4.5%, textile stocks rose strongly |
Practical investment strategies: From theory to practice
After thoroughly understanding comparing bonds and stocks, the important question is: how to apply this knowledge to practical investing in Vietnam?
Effective stock investment strategies
Vietnam’s stock market has its own characteristics, requiring appropriate strategies:
- Value investing: Look for stocks with low P/E (under 10), P/B under 1.5 and solid assets. Banks like VCB, BID, CTG or manufacturing companies like HPG usually have reasonable valuations in the 2023-2024 period with P/E around 8-12.
- Growth investing: Target companies with revenue and profit growth rates above 20%/year. FPT (technology), MWG (retail), VHM (real estate) are typical examples with compound revenue growth of 15-25%/year over the past 5 years.
- Dividend investing: Choose stocks that pay high and stable dividends, dividend yields of 5-8%/year. Power sector (POW, NT2), telecommunications (VNM) usually pay cash dividends of 6-10%/year – much higher than savings interest rates.
Smart bond investment strategies
With Vietnam’s bond market gradually recovering after the 2022 crisis:
- Hold to maturity: The most common strategy for individual investors, especially when the secondary market is underdeveloped. Choose bonds with attractive interest rates (8-12%) from reputable companies with collateral.
- Bond ladder: Allocate investments into bonds with different maturity terms (1, 3, 5, 7 years), helping maintain steady cash flow and reduce interest rate risk.
- Invest in bond funds: Suitable solution for investors without much time for research. Funds like VCBF-TBF (Vietcombank), SSIBF (SSI) with NAV growth of 7-9%/year, managed by experts.
| Investment objective | Appropriate stock strategy | Appropriate bond strategy |
|---|---|---|
| Capital growth (20-30%/year) | Stocks in technology, retail, small-cap sectors | High-interest corporate bonds with collateral |
| Regular income | High-dividend stocks: power, telecommunications, banking sectors | Government bonds or corporate bonds with periodic interest payments |
| Capital preservation | Blue-chip stocks, large-cap, low volatility | Short-term government bonds, AAA corporate bonds |
| Risk diversification | ETFs (E1VFVN30, FUEVN100), open-ended funds | Bond funds (VCBF-TBF, SSIBF) |
Pocket Option provides comprehensive in-depth analysis tools to help investors accurately assess stock and bond investment opportunities, from advanced stock filters to bond valuation models based on market interest rates.
New trends 2025: Changing landscape for Vietnamese stocks and bonds
Vietnam’s financial market is undergoing major changes, directly affecting comparing stocks and bonds in the near future:
- Digital transformation in investment: Platforms like Pocket Option are leading the investment digitization wave in Vietnam, helping investors access the market 24/7 at low cost. Over 85% of securities transactions are now conducted online, up from 60% in 2020.
- Hybrid products between stocks and bonds: Convertible bonds, bonds with warrants (like those from Masan, Vingroup) are new trends, combining the advantages of both asset types. In 2023-2024, the issuance volume of convertible bonds increased 35% compared to the 2020-2022 period.
- Sustainable investment (ESG): Both stock and bond investors are paying more attention to ESG factors. Green ETFs and green bonds are attracting large capital flows, especially from international financial institutions.
- Investment popularization: The number of securities accounts in Vietnam exceeded 7 million in Q2/2024 (equivalent to 7% of the population), doubling from 2021, showing a wave of new investors entering the market.
With these trends, the boundary between stock and bond investing is gradually blurring, creating a more diverse and complex investment environment, requiring Vietnamese investors to continuously update their knowledge.
Conclusion: Smart choices between stocks and bonds for Vietnamese investors
Through this article, we have conducted a comprehensive analysis comparing stocks and bonds in the context of Vietnam’s 2025 market. Instead of the question “should I choose stocks or bonds?”, the correct answer is: “how should I combine both appropriately?”
Investment decisions depend on:
- Financial goals: Rapid growth or stable income?
- Investment time: Short-term (1-2 years), medium-term (3-5 years) or long-term (over 5 years)?
- Risk appetite: How do you feel when your portfolio decreases 20-30% in the short term?
- Knowledge and experience: Do you have time to monitor the market daily?
Pocket Option not only provides a trading platform but also serves as a comprehensive investment partner with advanced technical analysis tools, real-time market information sources, and a professional 24/7 support team in Vietnamese. We are committed to helping Vietnamese investors make wise decisions when considering between stocks and bonds.
Remember, successful investing is not about choosing the right stocks or bonds, but building a strategy that suits personal goals and adapting flexibly to market fluctuations. With Vietnam’s rapidly developing economic context, opportunities are always open for investors with clear knowledge and strategies.
FAQ
Which is safer for new investors in Vietnam: stocks or bonds?
Vietnamese government bonds are certainly safer for beginners, with low price volatility and stable interest rates of 3-5%/year. However, new investors should not completely ignore stocks. A reasonable starting portfolio could be 70% government bonds or bond funds (like VCBF-TBF) and 30% stock ETFs (like E1VFVN30 tracking the 30 largest stocks). This approach helps you learn about the market with limited risk before making long-term allocation decisions.
How to buy bonds in Vietnam?
In Vietnam, there are 4 main ways to buy bonds: (1) Buy government bonds through auctions at the Hanoi Stock Exchange (requires an account at a member bank); (2) Buy corporate bonds through securities companies (SSI, VPS, VCSC) or banks (Techcombank, VPBank) with minimum investment usually from 100 million dong; (3) Invest in bond funds like SSIBF, VCBF-TBF with amounts from 1 million dong; (4) Trade derivative products based on bond interest rates through Pocket Option with flexible investments from 100,000 dong.
What is the appropriate ratio between stocks and bonds in an investment portfolio?
Instead of applying a rigid formula from developed markets (100 - age = % stocks), Vietnamese investors should consider the adjusted formula "115 - age = % stocks", reflecting the higher growth potential of emerging markets. For example, a 35-year-old investor might consider 80% stocks (115-35) instead of 65% according to the traditional formula. However, the most important factor is personal risk appetite - if you're not comfortable seeing your portfolio decrease 30% in the short term, reduce your stock allocation and increase bonds.
Should I invest in corporate bonds or Vietnamese government bonds?
This decision depends on investment goals and risk acceptance. Vietnamese government bonds (3-5% interest) are guaranteed by the government, with almost no default risk, but real returns (after inflation) may only be 0-1%. Corporate bonds (8-12% interest) provide significantly higher income but come with risks. After the Tan Hoang Minh and Van Thinh Phat crisis in 2022, you should only consider corporate bonds from reputable organizations (like Vinhomes, Masan), with good credit ratings, and clear collateral. A smart strategy is to allocate 70% to government bonds/bond funds and 30% to selected corporate bonds.
How do stocks and bonds react when interest rates change in Vietnam?
This relationship has been clearly demonstrated during 2022-2024 in Vietnam. When the SBV increased interest rates in 2022 to control inflation, the VN-Index fell 32.8% from its peak, and existing bond prices also decreased 5-10%. Conversely, when the SBV lowered policy rates from Q4/2023 to 2024, the stock market recovered strongly by 20% and bond prices increased 3-7%. It's important to understand that: with bonds, the relationship with interest rates is direct and immediate (interest rates increase → bond prices decrease); with stocks, the relationship is more complex and has a lag because it must pass through the impact on business operations. In a rising interest rate environment, consider shortening bond terms and increasing the proportion of banking sector stocks, which typically benefit from higher interest margins.
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