Effective Stock Investment Tips: 6 Comprehensive Guides for Vietnamese Investors

The stock market is an attractive investment channel, but many people still do not fully understand what stocks are, how to invest in stocks, and which types of investments are suitable. This article will help you grasp basic concepts about stocks, different investment products in the Vietnamese market, along with the advantages and disadvantages of each type.

Understanding What Stocks Are Before Investing

Stocks (or shares) are financial products with value that owners can trade on the market. Stocks exist in many forms: paper certificates, electronic formats, or ledger entries, all confirming the legal rights of the owner with respect to the issuer.

Stocks are traded on separate stock exchanges and also serve as the foundation for derivative financial instruments such as indices, futures contracts, exchange-traded funds, etc. Because stock prices constantly fluctuate with market movements, they are a popular investment channel with the potential for higher returns than traditional investment methods.

How to Invest in Stocks: 6 Popular Online Investment Methods

Similar to the global market, the Vietnamese stock market today offers all types of stocks and derivative tools such as indices, options, ETFs, etc. Each type has its own characteristics. Below are the most common investment products in Vietnam:

1. Initial Public Offering (IPO)(

An IPO )Initial Public Offering( is a stock issued by a company to the public for the first time to raise capital. This is a common type of common stock, usually in certificate form. Owners enjoy the usual rights of the company.

Advantages:

• High long-term growth potential
• Low purchase price, high profit potential
• Transparent and publicly disclosed stock prices

Disadvantages:

• Very difficult to buy stocks at the IPO moment
• Large price fluctuations, higher risks than regular stocks

) 2. Single Stocks - Basic Choice for Investors

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

Common stockholders have the right to participate in shareholder meetings, vote on decisions, and run for the board of directors. However, they do not have the right to withdraw capital, only transfer.

Preferred stockholders are purchased at a lower face value and are paid priority dividends. But they do not have voting rights or the right to run for the board.

Advantages:

• Reduced transaction costs, pay fees only when buying/selling
• Higher profits when investing long-term compared to gold, silver
• Full control over stock selection and timing of buy/sell
• High liquidity, easy to trade on the exchange

Disadvantages:

• Difficult to diversify the investment portfolio
• If capital is limited, hard to buy a variety of stocks
• Time-consuming research and management
• Easily influenced by personal emotions

3. Stock Index ###Index( - A Safer Investment Method

A stock index is a collection of certain stocks or bonds representing a specific segment. For example, VN30 includes the 30 strongest stocks in Vietnam )accounting for 80% of market capitalization(, listed on HoSE. Globally, S&P 500 includes the 500 strongest US stocks, DJIA includes 30 top stocks.

Advantages:

• Diversified investment - when buying VN30, you essentially buy 30 stocks at once
• Reduces long-term market volatility risks
• Cost-effective due to fewer transactions
• Saves time and effort, no need to analyze each stock individually

Disadvantages:

• Cannot achieve super-high profits due to the presence of weaker companies in the portfolio

) 4. Exchange-Traded Fund (ETF) - A Diversified Investment Tool

Exchange-Traded Fund ###ETF( is an investment fund holding many underlying assets. You can buy and sell ETF shares just like buying and selling company stocks. On the trading platform, ETFs are often marked in green. Some indices are also ETFs, such as S&P 500, DJIA.

In Vietnam, FTSE Vietnam ETF was the first established in 2008. Currently, there are 7 active ETFs, with 3 major funds )gồm VNM ETF, FTSE, and VFMVN30 ETF( accounting for over 90% of total capital.

Advantages:

• Diversification across many assets
• Easy to trade, low costs, dividend payments
• Some ETFs trade options )Options(, Long/Short orders

Disadvantages:

• Commissions can be high depending on the trading platform
• Small trading volume leading to large bid-ask spreads
• Some ETFs are heavily taxed

) 5. Stock Futures (Stock Futures) - For Advanced Traders

Stock index futures are contracts based on stock indices at a future date. These are derivative instruments where buyers and sellers agree on a price for a future time. At expiration, the seller must fulfill the contract at the agreed price.

In Vietnam, there are futures contracts based on VN30 with durations of 1 month ###VN30F1M(, 2 months )VN30F2M(, and other months.

Advantages:

• Can short sell without owning stocks beforehand
• Use leverage to increase profits
• Apply various investment strategies

Disadvantages:

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

) 6. Stock Contracts for Difference (CFD) (Stock CFD) - Flexible and Efficient

Stock CFD is a trading style where you do not buy the underlying asset ###actual stocks(, but instead buy a contract with a provider. Unlike actual trading, when buying Stock CFD, you use high leverage to increase profits. With margin trading, you can open Long-Short positions similar to Forex trading.

Advantages:

• High leverage - access larger positions with less capital
• 24-hour trading, global tools
• Instant, continuous intra-day trading
• Based on low margin

Disadvantages:

• Can lose more money than the initial capital
• CFD owners have fewer rights than common stockholders

Where to Trade Stocks: System of Exchanges and Brokers in Vietnam

According to HOSE’s report, the top 10 largest securities brokerage firms in 2020 include:

• SSI Securities Corporation )SSI(
• Ho Chi Minh City Securities Corporation )HSC(
• VCSC Securities Corporation )VCSC(
• VNDirect Securities Corporation )VNDS(
• Mirae Asset Securities Corporation )MAS(
• VPS Securities Corporation )VPS(
• MBS Securities Corporation )MBS(
• FPTS Securities Corporation )FPTS(
• Maybank KimEng Securities LLC )MBKE(
• BIDV Securities Corporation )BSC(

These brokers offer products including stocks, fund certificates, warrants, bonds, and VN30 indices, operating on both HOSE and HNX exchanges.

When choosing a trading platform, prioritize those with professional licenses, intuitive analysis tools, support for top indices, competitive fees, and reliable customer support.

Important Terms When Investing in Stocks

Stock Bonus - A method of issuing additional shares to raise capital. 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, helping the company raise funds and increase trading points.

Treasury Stock - The company repurchases its own shares from the market, reducing the number of shares outstanding, thereby decreasing dividends or preventing rivals from gaining control.

ESOP Stock - Preferential shares issued to employees at low prices to retain talent, sometimes to avoid income tax.

OTC Stock - Unlisted stocks not traded on the exchange. Due to lack of listing, prices can be inflated beyond their true value.

Bluechip Stock - Shares of leading, stable companies with growing finances and large market share. Examples include stocks in the VN30, HNX30 baskets.

Penny Stock )Penny Stock( - 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 Stock )Defensive Stock( - Stocks of stable, low-risk companies in essential sectors like electricity, water, pharmaceuticals.

Derivative Financial Instruments - Besides stocks, you can invest in CFDs, futures, indices. These tools are more flexible, have large markets, allow leverage, 24/7 trading, and support various strategies.

The Journey of Learning and Practicing Stock Investment

To make money from stock investing, you need to spend time learning basic knowledge, technical analysis, monitoring market trends, and accumulating trading experience.

Many trading platforms now provide educational materials on stock investment, market analysis tools, price forecasts, and updates on important market events.

The first step is to use a demo account to practice trading without financial risk. Through this process, you will better understand how to play stocks, develop your own strategies, and prepare for real trading.

Remember: “Practice makes perfect” — success in stock investing requires patience, continuous learning, and serious practice.