Where to invest your money in 2021?

In early days of 2021, many are already considering their investment options during a low interest rate environment. The question is, whether stock market or gold can maintain their strong growth when the Covid-19 still lingers.

Customers buying gold jewelry at a shop in Cau Giay street. Photo: Pham Hung.

Attractive gold and stock markets

In the last half of 2020, gold prices on the world market surged by 45% and became one of the best investment channels with strong returns, especially as the Covid-19 pandemic wreaking havoc on the world’s economy.

Huynh Trung Khanh, a senior consultant at Singapore-based World Gold Council, expected a bright outlook for the gold market in 2021. “There is a high possibility that the gold price could soon return to US$2,000 per ounce, mainly thanks to stimulus programs adopted by governments around the world,” Mr. Khanh told Hanoitimes.

“A hike in gold prices in the world market would lead to higher domestic prices,” he asserted.

Nevertheless, gold investors last year also went through heart dropping moments when the price after reaching its all-time peak of US$2,075/ounce in August but then plunged to a new low.

“Gold prices at that time were largely dependent on the global pandemic situation, in which a surge in infection cases would cause hikes in prices, while a roll-out of vaccine helps stabilize the price,” added banking expert Nguyen Tri Hieu.

2020 was also a successful year for investors in the stock market. Since the benchmark Vn-Index hit its March rock-bottom with 25% slump, the index has been on a strong rise from 600 to over 1,000 by late December, up 63%.

The Vn-Index ended the last trading session of the year at 1,103.87, a 142.88 increase or 14.87% against early 2020, making Vietnam’s stock market one of the world’s best performers. Vietnamese investors have opened 270,400 new accounts to invest in equities during the past 11 months, bringing the total to 2.7 million, with more than 300,000 accounts set to be opened this year. The 41,200 new accounts opened in November was the highest monthly figure ever. 

In 2021, the Vn-Index is set to surpass the 1,200-mark, thanks to the central bank’s current easing monetary policy to stimulate economic growth; a high economic prospect with estimated GDP growth of 6.5%; the revised Securities Law subject to take effect on January 1, 2021 with more support for investors; and the global Covid-19 vaccination programs.

Real estate market heats up

Meanwhile, the property market heated up in the fourth quarter of 2020 after staying low for previous three quarters. A recovery of the economy will almost certainly raise the property prices, which is the reason for investors to bet on real estate in anticipation of the eventual containment of the Covid-19 pandemic.

At present, real estate investors have opportunities to access loans with low interest rates and flexible payment structure of up to 30 years.

The real estate market in 2021 is expected to receive more tailwinds in the form of favorable pieces of legislations that became effective since the start of this year, including the revise Investment Law, the revised Construction Law, and new instructions for the implementation of the Land Law.

The focus in 2021 is forecast to continue to be industrial real estate, given the ongoing trend of manufacturers moving out of China to other countries, including Vietnam, noted a report from Savills Vietnam.

Money pouring into banks

While interest rates continue to go down, with the rate for deposits with maturities of one to two months at all-time low of 2.55% per year, bank deposits remain a safe investment channel for the majority of public. This is one of the main factors for banks’ profit to stay positive despite a difficult Covid-19 ravaged year.

“The room is limited for banks to further cut interest rates, so investors do not need to worry for a possibility of still lower interest rates at the moment,” added Mr. Hieu.

In addition to traditional investment channels, experts pointed to new options such as crypto currencies or foreign exchange trading (forex), but warned such activities are not legally recognized in Vietnam, and thus are exposed to high risks.