6 Effective Methods for Online Stock Investment in Vietnam

Online stock trading has become one of the most interested investment channels today, but many new investors still do not fully understand how it works or the appropriate approaches. This article will help you better understand the types of online securities products, the advantages and limitations of each form, thereby choosing a strategy that fits your financial goals.

What Are Securities?

Securities are financial assets with value that can be bought and sold on the market. They can exist in various forms: physical documents, electronic formats, or recorded in ledgers, all confirming the legal ownership rights of investors with respect to the issuer.

The stock market is where these products are traded. Additionally, securities also serve as the basis for derivative financial products such as indices, futures contracts, and exchange-traded funds.

Because stock prices continuously fluctuate according to the market, they are considered an important investment channel with the potential to generate returns surpassing traditional investment forms.

6 Effective Ways to Play Online Stocks

Today’s Vietnamese stock market offers a variety of products, including stocks, bonds, ETFs, indices, and other derivatives. Each product type has its own characteristics suitable for different investment objectives.

1. IPO Stocks (Initial Public Offering)

IPO stocks are shares issued by a company to the public for the first time to raise capital. This is common stock, usually issued in certificate form. Owners will enjoy corresponding rights of the company.

Advantages:

• High growth potential in the long term
• Bought at low prices, with significant profit potential
• Stock prices are transparent and publicly disclosed

Disadvantages:

• Very difficult to buy at IPO due to high demand
• Large price volatility, thus higher risk compared to regular stocks

2. Single Stocks

Single stocks allow shareholders to confirm ownership of a part of the company. There are two main types: common stocks and preferred stocks.

Shareholders owning common stocks have rights to participate in general meetings, vote on decisions, and run for board positions. However, they cannot withdraw capital, only transfer ownership.

Shareholders owning preferred stocks are paid before others and have a lower face value, but they do not have voting rights or the right to run for board positions.

Advantages:

• Low cost – no management fees, only transaction fees
• Higher profits for long-term investments compared to other channels like gold or silver
• Full control over stock selection, timing of buy/sell, and management approach
• High liquidity, easy to buy and sell on exchanges

Disadvantages:

• Difficult to diversify portfolio, leading to higher risk
• Requires substantial capital to buy different types of stocks
• Time-consuming research and management
• Susceptible to emotional decision-making, leading to mistakes

3. Stock Indices (Index)

Stock indices are a collection of a group of stocks or bonds representing a specific market segment.

In Vietnam, the VN30 index includes the 30 strongest stocks, accounting for up to 80% of market capitalization and listed on HoSE. Globally, the S&P 500 index comprises the 500 largest US stocks, accounting for 75-80% of the US market capitalization. The DJIA (Dow Jones Industrial Average) includes 30 leading stocks, calculated as a weighted average.

Advantages:

• Diversified investment – one amount of money can buy a portfolio of many companies
• Risk reduction through diversification, with long-term market volatility decreasing
• Cost savings due to fewer transactions
• Saves time and effort compared to selecting individual stocks
• Minimizes emotional decision-making

Disadvantages:

• Cannot achieve super-high profits because the portfolio may contain weak companies

4. Exchange-Traded Funds (ETFs) (ETF)

Exchange-Traded Funds (ETFs) are investment funds that hold multiple underlying assets. You can buy and sell ETF shares like regular stocks.

Some stock indices are also ETFs, such as S&P 500 and DJIA. In Vietnam, FTSE Vietnam ETF was the first established in 2008. Currently, there are 7 active ETFs, with the top 3 being VNM ETF (VANECK), FTSE, and VFMVN30 ETF, accounting for over 90% of the total scale.

Advantages:

• Diversification across different assets
• Easy trading, low costs, and dividend distribution
• Some ETFs can be traded with options and Long/Short orders

Disadvantages:

• High commissions depending on the trading platform
• Low trading volume leading to wider bid-ask spreads
• Some ETFs are heavily taxed

( 5. Stock Index Futures )Stock Futures###

Stock index futures are derivative financial contracts where the buyer and seller agree on the price of a stock index at a future date. At maturity, the seller must sell at the predetermined price regardless of market changes.

In Vietnam, there are futures contracts based on the VN30 index with different maturities such as 1 month (VN30F1M), 2 months (VN30F2M), and others.

Advantages:

• Short selling without owning the underlying stocks
• Use of leverage to increase profits
• Can apply many investment strategies similar to Forex trading

Disadvantages:

• Large lot sizes, difficult for small investors to access
• Continuous monitoring of the portfolio required
• Complex trading methods for beginners

( 6. Stock CFDs )Stock CFD###

Contracts for Difference (CFD) are trading instruments where investors do not own the underlying asset but buy a contract with a CFD provider. Unlike actual stock trading, you can use high leverage with smaller margins.

Advantages:

• High leverage – access larger capital with less money
• 24-hour trading across global markets
• Instant, continuous intra-day trading
• Low margin, more flexible
• Wide range of trading tools

Disadvantages:

• Losses can exceed the initial investment if leverage is misused
• Lower rights compared to actual stocks (no voting rights)

Stock Trading Platforms in Vietnam

According to HOSE statistics, the largest brokerage firms in Vietnam in 2020 include:

Top 10 Brokerage Firms:

• SSI Securities Corporation
• Ho Chi Minh City Securities Corporation
• Bản Việt Securities Corporation
• VNDirect Securities Corporation
• Mirae Asset Securities Corporation
• VPS Securities Corporation
• MB Securities Corporation
• FPT Securities Corporation
• Maybank KimEng Securities Limited Liability Company
• Investment and Development Bank Securities Corporation

These companies mainly provide products including stocks, fund certificates, warrants, bonds, and VN30 indices, operating on both HOSE and HNX.

When choosing a trading platform, consider:

• Legal operating license
• Variety of offered products
• Quality of analytical tools
• Market liquidity
• Customer support

Important Terms in Online Securities

Bonus Shares – A method of raising capital by splitting existing shares. For example, 1 share with a face value of 100,000 VND can be split into 2 shares with a face value of 50,000 VND each.

Treasury Shares – The company repurchases its own shares from the market to reduce outstanding shares, thereby decreasing dividend payouts or avoiding takeovers.

ESOP Shares – Preferential shares issued to employees at lower prices to retain talent.

OTC Shares – Unlisted shares traded outside official exchanges, often with inflated values due to their private nature.

Bluechip Stocks – Shares of leading, stable companies with strong financial growth and large market share. In Vietnam, stocks in VN30 or HNX30 are considered bluechips.

Penny Stocks – Very low-priced stocks with high volatility issued by small companies. They can generate high profits but also pose significant risks of large losses.

Defensive Stocks – Stable, low-risk stocks. Essential sectors like electricity, water, and pharmaceuticals are considered defensive.

Derivative Financial Instruments – Besides stocks, you can invest in CFDs, futures, and indices. These tools are more flexible, with markets much larger, allowing leverage, 24/7 trading, and various strategies.

How to Effectively Learn Online Stock Investment

To make money from online stocks, you need to spend time learning basic knowledge, technical analysis, market trend updates, and accumulating practical trading experience.

Key Steps:

1. Master basic concepts of securities and product types
2. Learn technical and fundamental analysis methods
3. Follow market events and news affecting prices
4. Start with a demo account to practice skills
5. Manage risks disciplinedly

Continuous learning and practicing on a demo account are crucial first steps before trading with real money. Begin your online stock journey with a planned and patient approach.