I am 54 years old this year, just retired. When I was young, in addition to working for a salary, I also earned extra money from personal loans, and when I had extra money, I bought gold to store. In recent years, I have tried investing in land. Up to now, I have more than 10 billion VND, not counting two plots of land in the provincial capital with a market price of about 3 billion VND each.

Some time ago, I invested a little money in stocks, but due to lack of knowledge and effort to monitor the market, I lost more than 50%. I was scared so I withdrew all my money. Now I really don't know what to do other than deposit it in the bank, but I find the interest rate too low.

According to the expert, how should I invest 10 billion VND to have more money for a comfortable old age for both my husband and I (both have pension and insurance). If there is any surplus, I will use it as capital to support my two children when they want to start a business.

Dinhdinh1969

Consultant:

The need to ensure financial security at retirement age is very important. The average life expectancy of Vietnamese people is currently around 75, maybe higher. Thus, you need to prepare financially to enjoy a comfortable old age for at least 25-30 more years.

We also need to identify this as an investment for retirement, so we need to consider and evaluate the financial situation and needs for retirement before allocating capital to the investment portfolio. Below are the factors to consider.

Expense

Retirement expenses will include: health care, travel - socializing, living expenses. Health care expenses will depend on whether you have life insurance with additional products or not, whether you have additional health insurance, health history and health status. When we have a good health protection mechanism, the amount of money prepared for health will decrease and vice versa.

Travel and socializing costs will be higher. Because at this time, you will spend more time for yourself, and will need to connect with old friends and peers when work relationships decrease when you retire.

The normal cost of living in retirement will not be too high, because most of us will no longer have to shoulder the burden of raising children and educating them. However, we still need to take into account lifestyle inflation, when the mentality of enjoying old age and wanting to spend better on ourselves will cause many expenses to increase at a higher level.

Income

When you retire, in addition to passive income from pensions, interest from savings, house or land rentals, you need to see what other sources of active income you have and how stable is this income? You can mention active income from translation, consulting, teaching, writing books, online business or any job suitable for retirement age, bringing joy in life in addition to generating income.

If your total income is stable, you do not need to allocate your investments to asset segments with high profit performance or high volatility because it comes with high risk. Having a stable source of income will reduce your pressure when investing and also bring joy and increase connection when you retire.

Financial goals and legacy for children

You need to answer the following questions: What are your short, medium and long term financial goals? Do you plan to take a cross-country trip or a long-term trip abroad every year? When you get married, marry off your children or when your grandchildren grow up, what do you plan to give them?

Also, do you have any other adjustments to your current residence or lifestyle, such as changing your car or renovating your house? How do you plan to prepare an inheritance for your two children? Do you plan to financially support your children or grandchildren in their daily lives?

Risk tolerance

This is a measure to assess the investors' willingness to accept risks and the benefits it brings. Determining this will help you quantify your investment decisions instead of making emotional decisions. High profits will go hand in hand with high risks and vice versa, when the investment is in the safe zone, the profits will not be high.

Financial contingency plan

Before investing, you need to set up a reserve fund for 6-12 months of living expenses, and save for a one-month term to cover unexpected spending and medical expenses.

The level of provision will depend on your income and the stability of your income. If you do not prepare a reserve fund, when you need money, you will have to sell your assets at a low price, and the investment efficiency will not be as expected. In addition, you need to have contingency plans for negative scenarios when you have to adjust your income and expenses accordingly (decrease or increase by 30%).

Based on the above assessment results, you will be able to allocate capital for an investment portfolio . Due to the lack of complete information about your financial situation and retirement needs to review and evaluate, I can only share a few notes on allocation methods for the majority of retirement customers as follows.

First of all, you need to diversify your investment products including savings, rental real estate, and open-end funds. This will help you allocate risks and improve the return on your investment portfolio.

I have some notes about investment assets. Deposits in small banks will have higher interest rates than deposits in large banks, the current interest rate fluctuates between 8.5-9.5% per year, good profit, low risk compared to other investment channels. The smaller the apartment value, the higher the rental yield, however, you should only buy apartments that have been handed over for less than 5 years, to ensure the price growth of the apartment. Townhouses for rent have lower rental yield than apartments, in return, the price growth will be more stable and better.

With open-end funds operating in the market, this is a form of passive investment in the stock market. However, you should only invest a maximum of 10% of the total asset value and the investment cycle of this asset is medium-term, from 5-7 years.

In addition, before deciding to invest, you need to understand the products, the investment cycle of each product, the fluctuations in profits, their liquidity, investment procedures, taxes and related fees. Understand so that you do not invest emotionally, but have a specific plan.

Finally, you need to create a comprehensive financial plan for your retirement period, equivalent to the next 30 years, by creating a cash flow schedule for your entire expected life cycle. This plan includes income sources over the years, taking into account the potential growth of income sources; personal spending needs, taking into account inflation and lifestyle inflation at specific stages; other related goals; monitoring and updating results, investment status and asset growth.

When you have a clear understanding and a comprehensive picture of your financial situation for retirement, you will be more confident and enjoy your retirement to the fullest. You can also seek the help of a personal financial planning expert to build a detailed and meticulous retirement plan.

Tran Thi Mai Han

Personal Financial Planning Expert at FIDT