## How Should Small Investors Allocate 10,000 NT Dollars in Financial Stocks? A Complete Guide from Fixed Deposits Substitutes to Rebound Opportunities

Taiwan stocks hover around 28,000 points, prompting many to reconsider their capital allocation. You might also have this dilemma: bank fixed deposit annual interest is only 2%, while friends earn steady 5-7% dividends from financial stocks. You wonder, should I follow suit?

Actually, this wave of capital is quietly flowing into financial stocks, and there’s a reason behind it.

## Why Should You Take Financial Stocks Seriously Now?

**Prices Haven't Skyrocketed Yet**

Tech stocks have surged fiercely this wave, with P/E ratios exceeding 30 times. But what about financial stocks? Major banks and financial holding companies generally have P/E ratios of 10-15 times, plus a 5-7% yield. Think about it: are you buying tech stocks with a P/E of 30 and earning only 3% annually, or choosing financial stocks with a P/E of 12 and a steady 6% dividend?

**Interest Rate Environment Isn’t as Bad as You Think**

The Fed is cutting rates, but Taiwan’s financial holding companies have already earned over 560 billion NT dollars in the first 11 months of this year, setting a record high. In other words, even in a low-interest environment, the dividend-paying ability of financial companies may not decline significantly. As long as the economy doesn’t hard land by 2026, there’s potential for stronger profits and dividends. The space for price rebound will naturally emerge.

**Clear Signals of Capital Rotation**

Electronics stocks have risen a lot, and smart institutional investors are starting to buy defensive stocks. Fubon Financial, Cathay Financial have recently performed well, which is no coincidence. When the market shows slight recession signs, financial companies with good loan quality and high capital adequacy ratios tend to fall the least—2022’s bear market is a perfect example: the weighted index plunged over 20%, but the financial index fell less than 15%.

Compared to tech stocks that drop 10% on a pullback, financial stocks usually fluctuate only 3-5%, making the psychological burden much lighter.

## What Types of Financial Stocks Are There? Where Should Small Investors Start?

In essence, financial stocks include banks, insurance, and securities firms. But if you break it down further, there are still many choices:

**Financial Holding Companies** are the most popular. Cathay Financial, Fubon Financial, and CTBC Financial are established giants, covering banking, life insurance, securities, asset management, with stable shareholder structures and large asset scales. Beginners usually start here because of diversification and stable dividends.

**Pure Banks** are suitable for those who want to "hold steadily." Like Chang Hwa Bank and Taichung Bank, their businesses are relatively simple, with less volatility, but growth potential isn’t as diverse as holding companies.

**Insurance and Securities Stocks** tend to be more volatile. They are cyclical stocks, better suited for market turning points—like when trading volume suddenly surges, securities firms often jump first.

**The Right Attitude for Beginners**: If you have limited capital, instead of blindly picking stocks, start with financial ETFs (like 0055 Yuanta Financial). They have low barriers and automatic diversification. If you want to try short-term adjustments, trading CFDs is also an option, but that involves technical skills for swing trading.

## Which Stocks to Buy Now? Taiwan Financial Stock List

Based on the latest institutional data and recent trends, the following stocks are worth paying attention to:

**Fubon Financial(2881)**
Subsidiaries in insurance provide stable contributions; wealth management and digital banking grow rapidly. This year, the stock price rose from NT$65 to NT$85, a 30% increase. Estimated dividend yield is 6.5%, with a P/E ratio around 12. EPS forecast is 4.5-5 NT dollars. It’s like Taiwan’s "all-round player" among financial holding companies—insurance, banking, securities. The risk is overseas expansion; geopolitical fluctuations could pose concerns.

**Cathay Financial(2882)**
Southeast Asia insurance business growth is particularly impressive, with wealth management fee income expected to grow 15% annually by 2025. Stock price rose from NT$50 to NT$68, a 36% increase. EPS forecast is 4 NT dollars, P/E ratio 11, with an estimated yield of 6-7%. If you’re optimistic about the Asia-Pacific economy in 2026, this stock has potential. The downside is insurance stocks are sensitive to interest rates; rapid rate cuts could lower investment returns.

**CTBC Financial(2891)**
Leading in digital transformation, mobile banking users are projected to grow 20% by 2025. Stock price increased from NT$28 to NT$36, a 28% rise. EPS forecast is 2.8 NT dollars, P/E ratio 13. If China’s economy recovers (though uncertain), this stock might surprise. But policy uncertainty carries risks.

**E.SUN Financial(2884)**
Focuses on SME loans and retail banking, known for stability. Net interest income grows 10% annually, favored by conservative investors. Price rose from NT$25 to NT$32, a 28% increase. EPS forecast is 2.5 NT dollars, P/E ratio 12, with a 6% yield estimate. Its feature is concentrated in Taiwan, suitable for long-term holding for dividend income. The risk is its business is relatively single, and domestic economic slowdown could impact growth.

**Chang Hwa Bank(2801)**
Pure bank stock, with high capital adequacy and stable loan quality. Wealth management grows 12%. Price increased from NT$16 to NT$20, a 25% rise. EPS forecast is 1.5 NT dollars, P/E ratio 10, making it the most affordable valuation. Estimated dividend yield is 5%. But being a pure bank, growth space is more limited.

## US Financial Stocks Also Worth Watching

Taiwan investors can now use cross-border trust accounts or financial ETFs to allocate into US financial stocks. The following stocks are highly regarded by institutions for 2026:

**Berkshire Hathaway(BRK.B)**
The world’s most famous investment holding company, owning hundreds of subsidiaries in insurance, railroads, energy, manufacturing, and holding major stakes in Apple, American Express, etc. Simply put, it’s like a giant investment fund—Buffett uses insurance premiums to buy good companies, earning compound interest. It grew 25-30% in 2025, with cash holdings of up to USD 380 billion. Many call it "the most stable defensive stock in US stocks."

**JPMorgan Chase(JPM)**
The largest US bank, covering retail banking, investment banking, wealth management, credit cards. Over 300,000 employees worldwide, market cap over USD 800 billion. Grew 30-35% in 2025. If capital markets stay active, M&A and IPO revival, this stock has great profit growth potential.

**Bank of America(BAC)**
The second-largest US bank, with over 68 million customers and the largest deposit scale in the US. Offers services accessible to ordinary people—accounts, mortgages, credit cards, wealth management. Focuses on retail, with high customer stickiness. Grew over 35% in 2025.

**Goldman Sachs(GS)**
The most famous Wall Street investment bank, specializing in M&A, IPOs, trading stocks and bonds. Grew 25-30% in 2025. If you believe the capital markets will stay hot into 2026, this is a high-growth stock, but with high volatility. Limit to no more than 20% of your portfolio.

**American Express(AXP)**
A globally renowned credit card company targeting high-end customers. Customers have strong spending power, relatively stable regardless of economic cycles, with less volatility than traditional banks. Grew 20-25% in 2025.

## How to Start Allocating with 10,000 NT Dollars? Practical Strategies

**Start with High Dividend Yield Stocks**

Choose stocks with at least 5% dividend yield, relatively low P/E ratios (Taiwan financial holdings 10-15, US financials 15-20), and stable profits. Taiwan options: Fubon, Cathay, E.SUN; US options: JPM, BAC.

**Pick the Right Entry Timing**

The best time is usually when the market is high and volatile, and electronics stocks are pulling back, as capital tends to rotate into financials. Or wait until individual stocks’ dividend yield exceeds 6-7%, then buy in batches.

**Hold for Dividends After Buying**

Set target prices but stay flexible. For example, if you set NT$50 but the stock drops to NT$45 while the company’s profit improves, adjust your target to NT$60. Time is a friend of good companies; for mature industries like financials, holding longer benefits you more.

**Timely Reduce or Rotate Positions**

When reaching your psychological target price or dividend yield drops below 4% (meaning the stock has risen too much), consider trimming or selling completely, then switching to undervalued stocks.

This approach over the years mainly yields returns from dividends and price rebounds, without the need to watch the market daily.

## Are Financial Stocks Truly Invincible? Risks Must Be Considered

Despite the good points, risks exist.

**Black Swans Can Hit Hard**

Financial stocks’ performance over the past decade hasn’t outperformed the broader market. When a black swan occurs, they tend to fall more sharply. In China’s A-share crash in 2015, Taiwan’s 50 index dropped 24%, but Yuanta MSCI Financial fell 36%. After the Russia-Ukraine war in 2022, Sberbank experienced a bank run, with its stock plunging 50% in days, even hitting $0.01 at overseas exchanges. During crises, banks face the risk of collapse.

**Interest Rate Risks**

Financial stocks are sensitive to interest rate changes. Rising rates benefit bank net interest margins, but low rates suppress profits and dividends. It’s hard to predict rate movements accurately.

**Loan Default Risks**

Financials are prone to bad debts. If borrowers default, banks face non-performing loans and write-offs.

**Market Risks**

Market bottoms are unpredictable, and financial stocks often fall more deeply. During systemic risks, they are most impacted.

## Swing Trading as an Alternative Approach for Financial Stocks

Financial stocks are cyclical, with strong seasonality, making them suitable for swing trading rather than buy-and-hold.

Swing trading involves using technical analysis to profit from upward moves in bull markets and downward moves in bear markets. Common indicators include moving averages, support/resistance, RSI, etc. You can start with these 3 steps:
1. Register an account and fill in info
2. Deposit funds (minimum can be as low as USD 50)
3. Constantly look for trading opportunities

This method suits investors with some technical analysis knowledge and the ability to tolerate short-term fluctuations.

## The Long-term Investment Value of Financial Stocks

Although often called "boring and conservative," financial stocks make up about 13% of the world’s largest stock index, S&P 500. That’s no coincidence.

**Stable Long-term Performance**

Over the past 30 years, the financial sector’s growth has outpaced the overall economy. This enables financial companies to pay dividends higher than average, creating steady profits.

**Governments Won’t Abandon Them**

Financials are tied to the health of the global economy; governments won’t easily let big banks fail. Remember the bailout after the 2008 financial crisis? This special status reduces risks compared to other industries, especially during recessions or crises, when they often receive support.

**Relatively Low Volatility**

Banks and insurance are closely linked to the economy, with generally lower volatility than tech stocks. This advantage is especially clear during market turbulence.

**Rising Interest Rates Are a Plus**

If the US can avoid recession, many banks’ prospects look bright. Higher interest rates typically expand net interest margins. Although rapid rate changes can cause chaos, in the long run, banks will adjust their books for stronger earnings growth.

## Final Words

As a pillar of mature markets, financial stocks may lack the explosive growth of tech, but their 13% share in the S&P 500 is no accident. Long-term, they have the potential to outperform the market.

If your 10,000 NT dollars aim for steady income without daily trading, starting with high-dividend financial stocks is a good choice. Valuations are reasonable, dividends stable, and rebound potential exists. But don’t ignore risks—diversify your portfolio and avoid putting all your eggs in one basket; that’s the fundamental rule of investing.