## Starting with 10,000 NT dollars for small investors: How to earn monthly income using bank stocks and financial stocks?

Are you also considering putting your money in a bank savings account with an annual interest rate of only 2%, while some stocks in the market steadily pay dividends of 5-7%? The difference is not just in numbers but also in the power of compound interest.

Recently, the Taiwan stock market index has been consolidating at high levels around 28,000 points. Many people have noticed that funds are quietly shifting from AI technology stocks to the financial industry. Why is this happening? Because after electronic stocks surged, their P/E ratios have skyrocketed to over 30 times, while financial stocks still remain at 10-15 times, presenting an opportunity for valuation arbitrage.

## How to categorize financial stocks? Which type should beginners start with?

When talking about financial stocks, it mainly refers to banks, insurance companies, and securities firms. Currently, there are about 49 listed financial stocks in Taiwan.

**What is the role of bank stocks?** Bank stocks refer to shares issued by banks themselves, such as Chang Hwa Bank and Taichung Bank. Their main businesses are deposits and loans, which are relatively simple but stable. Compared to other stocks, bank stocks tend to have less volatility, making them suitable for those who prefer steady holding without frequent trading.

**Why do many recommend financial holding companies?** Financial holding companies include multiple business units such as banks, life insurance, securities, and asset management. Their diversified operations help spread risk. Examples in Taiwan include Fubon Financial, Cathay Financial, and CTBC Financial. These companies generally have dividend yields above 5%, making them popular choices for small investors.

**What about insurance and securities stocks?** These tend to be more volatile and are better suited for entry during market transitions. When trading volume suddenly increases and everyone starts chasing stocks, securities firms usually lead the rally; when interest rates change, insurance stocks also fluctuate more noticeably.

Not sure which to choose as a beginner? It’s recommended to start with financial ETFs (like 0055 Yuanta Financial), which have low barriers to entry and good diversification, eliminating the need to pick individual stocks.

## What strategies are there for investing 10,000 NT dollars in financial stocks?

**Stage 1: Small-scale trial**
Start with 10,000 NT dollars, and consider investing in financial ETFs first, adding a little each month. This way, you can enter the market gradually without committing too much at once.

**Stage 2: Diversified allocation**
If you want to pick stocks yourself, choose 2-3 financial holding companies and 1 bank stock, allocating about 3,000-4,000 NT dollars to each. This combination allows for growth potential from the financial holdings and stability from the bank stock.

**Stage 3: Regular additional investments**
Set aside a fixed amount from your salary each month to buy stocks, regardless of the purchase price. Over time, this will help average out your costs. This is a lazy investment method, ideal for working professionals.

## How to select Taiwanese financial stocks? Focus on these five options

Based on the latest data in 2025, here are some of the most discussed choices:

**Fubon Financial (2881)**
Taiwan’s leading financial holding company, with stable contributions from Fubon Life Insurance and rapid growth in wealth management and digital banking. Estimated P/E ratio around 12 times, dividend yield of 6.5%. Risks include potential impacts from geopolitical tensions affecting overseas expansion.

**Cathay Financial (2882)**
Significant growth in Southeast Asian insurance business, with wealth management fees increasing by 15% annually. Estimated P/E ratio of 11 times, dividend yield of 6-7%. The downside is that insurance stocks are sensitive to interest rate changes; rapid rate cuts could lower investment returns.

**CTBC Financial (2891)**
Leading digital transformation, with continuous growth in mobile banking users. Estimated P/E ratio of 13 times, dividend yield of 5.5%. However, exposure to the Chinese market carries risks, and policy uncertainties may affect some operations.

**E.SUN Financial (2884)**
Focuses on small and medium enterprise loans and retail banking, with stable operations. Estimated P/E ratio of 12 times, dividend yield of 6%. Its conservative style makes it suitable for long-term holding, but its business concentration in Taiwan is a limiting factor.

**Chang Hwa Bank (2801)**
A pure bank stock with high capital adequacy and stable loan quality. Estimated P/E ratio of 10 times, dividend yield of 5%. It has the lowest valuation but offers less growth potential compared to financial holding companies.

## Are US financial stocks worth paying attention to?

**JPMorgan Chase (JPM)**
The largest bank in the US, covering retail banking, investment banking, and wealth management, with over 300,000 employees worldwide and a market cap exceeding $800 billion. If capital markets stay active in 2026, profit growth potential is high.

**Bank of America (BAC)**
The second-largest US bank, most commonly used by Americans, with over 68 million customers and the largest deposit scale in the US. Focuses on retail banking, offering relatively stable performance.

**Berkshire Hathaway (BRK.B)**
Warren Buffett’s investment holding company, owning insurance, railroads, energy, and hundreds of other enterprises, as well as large holdings in Apple, American Express, and more. Known as the “most stable defensive stock in the US,” with a huge scale.

**Goldman Sachs (GS)**
A leading Wall Street investment bank, specializing in mergers and acquisitions, IPOs, and trading. Its clients are mainly corporations and institutional investors. If capital markets remain active in 2026, it has strong explosive potential but also higher volatility.

**American Express (AXP)**
A global premium credit card company, earning mainly from fees and transaction income. Customers tend to have strong spending power, making it less sensitive to economic fluctuations. Its volatility is lower than traditional banks, offering more stability.

Taiwanese investors can directly place orders through securities apps or buy financial ETFs. For short-term trading, US stock CFDs are also an option.

## Is it feasible to treat financial stocks as "fixed deposit stocks"?

Absolutely, but with a clear understanding: they are not risk-free.

Many investors buy financial stocks and hold them, collecting dividends annually as interest. This strategy is not inherently wrong, especially when starting with high-dividend-yield (above 5%), low P/E stocks or ETFs with stable profits. However, financial stocks still fluctuate and cannot be regarded as risk-free deposits.

**Practical advice:**

When selecting stocks, look for those with low P/E ratios and stable dividends, such as Taiwan’s Fubon Financial, Cathay Financial, E.SUN Financial, and US stocks like JPM and BAC. The best entry points are usually during market high volatility, when funds rotate into financial stocks, or when dividend yields exceed 6-7%, then buy in batches.

After purchasing, hold and collect dividends annually. Set a psychological target price but stay flexible—if the company’s profits improve and your original target (say, 50 NT dollars) seems too conservative, raise it. When the target price is reached or the dividend yield drops below 4% (indicating the stock price has risen too much), consider trimming or switching to undervalued alternatives.

Over the years, most returns come from dividends and capital appreciation, without needing to watch the market daily.

## Is swing trading the correct approach for financial stocks?

Financial stocks are cyclical “economic cycle stocks,” with strong periodicity. They are more suitable for swing trading rather than holding blindly.

Swing trading involves technical analysis to profit from price fluctuations in bull and bear markets. Common indicators include moving averages, support and resistance levels, RSI, etc. Compared to long-term fixed deposits, swing trading allows more flexibility to adjust positions during market transitions.

However, different market environments require different strategies. During economic downturns, financial stocks can fall sharply. For example, during China’s A-share crash in 2015, the Taiwan 50 Index dropped a maximum of 24.15%, but Yuanta MSCI Financial ETF fell as much as 36.34%. In systemic risk events, financial stocks tend to be hit hardest.

## Risks of investing in financial stocks

**Market risk**
In bear markets, financial stocks often decline more than the overall market. During black swan events, the impact on financials is greatest. For example, after the Russia-Ukraine war in 2022, Russian Sberbank’s stock plummeted 50% within days.

**Interest rate risk**
Rising or falling interest rates directly affect financial stocks. When rates rise, bank margins expand, increasing profits; low interest rates can suppress earnings. Predicting interest rate movements accurately is difficult.

**Loan default risk**
Financial institutions face bad debt risks. If borrowers cannot repay loans, banks face potential losses, especially during economic recessions.

**Government support as a double-edged sword**
While governments usually prevent major banks from failing (as seen after the 2008 financial crisis), this also means financial stocks are highly regulated, limiting growth potential.

## Conclusion: The long-term value of financial stocks

Although they lack the explosive growth of tech stocks, financial stocks account for about 13% of the S&P 500 and have shown significantly faster earnings growth over the past 30 years compared to the overall economy. Because of this, they can pay higher-than-average dividends to shareholders and maintain stable P/E ratios.

For small investors in Taiwan, investing 10,000 NT dollars in financial stocks is entirely feasible. Starting with financial ETFs or selecting 2-3 stable financial holding and bank stocks, then adding regularly each month, can, over several years, yield results through dividends and capital appreciation.

The key is not to treat financial stocks as risk-free assets or to concentrate all funds in one stock. Proper diversification, understanding the risks, and viewing financial stocks as a role within a broader investment portfolio—“attack when possible, defend when necessary”—are the smart ways to invest.