6 Effective Ways to Invest in Stocks Online - From Basic to Advanced

The stock market is one of the most popular wealth-building channels, but to succeed, you need to understand the different forms of online stock investment. This article will help you understand each type of security, their advantages and disadvantages, and how to apply them to build a suitable investment portfolio.

What Is Stock? Basic Concepts

(Stocks or Shares) are financial products representing ownership or debt. Stockholders own a portion of the company’s value or the issuer, and can buy and sell on the stock market.

Unlike traditional investment forms, stocks have high liquidity and higher expected profits. Data over the past 80 years shows that stock returns outperform gold and other assets.

In addition to traditional stocks, the market also offers derivative products such as ETFs, futures contracts, and CFDs. Each type has its own characteristics, suitable for different investment goals.

6 Online Stock Investment Forms You Need to Know

1. IPO Stocks - Opportunities from New Companies

IPO (Initial Public Offering) is the first issuance of shares to the public. This is a way for companies to raise growth capital and an opportunity for early investors to participate in a potential enterprise.

Strengths:

• High profit potential in the long term if choosing the right company
• Purchase price lower than subsequent offerings
• Transparent, publicly disclosed stock prices

Weaknesses:

• Very difficult to buy stocks at IPO (high demand exceeds supply)
• Large price volatility due to uncertainty
• Higher risk compared to long-listed stocks

2. Single Stocks - Classic and Flexible

Single stocks allow you to directly own a part of the company. There are two main types: common stocks (with voting rights) and preferred stocks (priority dividend payments but no voting rights).

Strengths:

• Low management costs - only pay fees when buying and selling
• Long-term profits outperform other investment channels
• Full control over buying and selling timing
• High liquidity, easy to trade on exchanges

Weaknesses:

• Difficult to diversify if capital is limited
• Concentration risk if holding only a few stocks
• Time-consuming to research each company
• Decisions easily influenced by emotions

3. Stock Indexes - Easy Diversification

Stock indexes are baskets of stocks representing a market segment. For example, VN30 includes the 30 strongest stocks, accounting for 80% of Vietnam’s market capitalization. S&P 500 includes 500 top US companies, DJIA is the 30 best companies weighted by average.

Strengths:

• Automatic diversification - one amount buys the entire basket of 30-500 companies
• Risk reduction through capital dispersion
• Cost-saving on transaction fees
• Time-saving research - no need to analyze each company

Weaknesses:

• Returns limited by weaker companies in the basket
• Impossible to achieve super-high profits from a specific company

4. ETF - Flexible and Accessible

ETF (Exchange-Traded Fund) is a fund investing in multiple assets, tradable like regular stocks. In Vietnam, FTSE Vietnam ETF has been established since 2008, with currently 7 ETFs operating.

Strengths:

• Automatic diversification
• Easy trading with low costs
• Some ETFs can be traded with options (Options)
• More flexible than traditional indexes

Weaknesses:

• Commissions can be high depending on the trading platform
• Low liquidity → large bid-ask spreads
• Some funds are heavily taxed
• Difficult to grasp the actual portfolio structure

( 5. Index Futures Contracts - Professional Tools

Stock Futures are contracts that determine the price of a stock index at a future date. At maturity, the seller must deliver at the agreed price regardless of market fluctuations. In Vietnam, VN30 futures contracts are available with 1-3 month maturities.

Strengths:

• Can short sell without owning stocks
• Use leverage to multiply profits
• Diverse trading strategies )trend following, technical analysis###
• Similar trading to Forex

Weaknesses:

• Large contract sizes, difficult for small capital
• Require continuous monitoring
• High complexity for beginners
• Fast loss risks

( 6. CFD - Maximum Flexibility

CFD )Contract For Difference### allows trading price differences without owning the actual asset. You can use high leverage to earn profits from a small margin.

Strengths:

• High leverage - large profits with little capital
• 24/7 trading, access to global tools
• Fast, continuous order execution within the day
• Low margin, flexible risk management

Weaknesses:

• Potential losses exceeding initial capital when using leverage
• Limited rights compared to real stocks (no voting rights)
• High risk - not suitable for beginners

Stock Trading Platforms in Vietnam

( Leading Brokerage Firms

According to HOSE data in 2020, the top 10 largest brokerage firms include:

• SSI
• HSC )Ho Chi Minh City###
• VCSC (Bản Việt)
• VNDirect
• Mirae Asset
• VPS
• MBS
• FPTS
• Maybank Kim Eng
• BSC

These companies mainly provide stocks, fund certificates, warrants, bonds, and VN30 indexes, operating on both HOSE and HNX exchanges.

Besides domestic brokers, international providers also support Vietnamese investors with a wider range of tools such as international indexes (S&P 500, AUS200, JPN225), CFDs, cryptocurrencies, commodities, and Forex.

Important Terms When Investing

Stock Bonus - Issuance of additional shares to raise capital. For example, 1 share of 100,000 VND split into 2 shares of 50,000 VND.

Treasury Stock - The company repurchases its shares from the market to reduce circulating supply, affecting dividends.

ESOP - Employee stock ownership plan with discounted shares to retain talent.

OTC Stock - Unlisted stocks, prices may be inflated.

Bluechip - Shares of leading, stable companies with significant market impact (e.g., VN30).

Penny Stock - Very low-priced stocks with high volatility, balancing risk and opportunity.

Defensive Stock - Essential sector stocks (electricity, water, pharmaceuticals), with lower risk.

Starting Your Online Stock Investment Journey

To succeed in online stock investing, you need:

1. Continuous Learning - Master technical analysis, stay updated on market trends
2. Experience Accumulation - Start with demo accounts, keep trading logs
3. Risk Management - Never invest all capital in one company
4. Event Monitoring - Economic news, financial reports directly impact stock prices

The stock market has no long-term predictors - only persistent, disciplined, and continuously learning investors. Start with basic types, gradually improve your skills, and build an investment portfolio aligned with your goals and capacity.