Variable Insurance Recommended by Chairman Park Hyun-joo... There Are Separate Insurance Policies That Generate Profits

"Investing in Overseas Stock Funds Over Domestic Stocks... 1.5 to 2 Times Higher Returns"

[Asia Economy Reporter Oh Hyung-gil] "There is one very important thing in investing: you must not be impatient. There are several key points on how to prepare for retirement. You can prepare for retirement without needing a large sum of money. You should start preparing for retirement from a young age through IRP personal pensions, retirement pensions, and variable annuities. Forced savings through pensions allow you to live comfortably in retirement with a small amount of money. Retirement preparation should not start after turning 50, but from the moment you begin working, running a business, or engaging in self-employment," said Park Hyun-joo, Chairwoman of Mirae Asset Group.

A YouTube video featuring Park Hyun-joo, Chairwoman of Mirae Asset Group, surpassed 100,000 views within two days of being uploaded, gaining popularity among the 'investment-savvy' crowd. Chairwoman Park emphasized the importance of starting retirement preparation early through pensions and variable insurance products.

Variable insurance was once considered an 'ugly duckling' just a few years ago, delivering returns lower than the inflation rate. However, with the recent advent of the 'Samcheonpi (KOSPI 3000)' era, it is gaining attention as an investment product suitable for long-term, diversified investment.

Variable insurance is fundamentally an insurance product. It serves purposes such as disease coverage or pension receipt. It is preferred by customers who seek both investment growth and stability. Like all investment products, returns vary depending on the investor's decisions, so an effective management strategy is essential.

According to a report analyzing variable insurance fund returns and implications released by Mirae Asset Investment and Pension Center, overseas funds have shown superior long-term returns compared to domestic funds.

Variable Insurance Return Rate by Quintile Fund Type (Source: Mirae Asset Investment and Pension Center)

An analysis of changes in the asset composition of variable insurance funds over the past 10 years from 2010 to last year revealed that overseas investment has accelerated since 2016.

The scale of overseas investment assets within variable insurance funds increased from 3.3 trillion KRW in 2010 to 6.5 trillion KRW in 2016, and reached 12.8 trillion KRW by the end of September this year. However, its proportion remains relatively low at 12.1%.

By type, the proportion of bond-type funds has grown more than fourfold compared to 2010. As bond prices rose due to a declining interest rate trend, the bond-type proportion, which was only 7.2% in 2010, increased to 29.2% this year.

The report explained, "This is because bond-type funds have been more stable in returns compared to domestic equity-type funds due to the continuous decline in interest rates since 2010."

Additionally, an analysis of the returns of 779 variable insurance funds managed for over five years showed that the longer the investment period, the higher the returns of equity-type funds compared to bond-type funds.

The 3-year returns ranked in order: overseas equities, domestic bonds, overseas bonds, and domestic equities. The 5-year returns were investigated in the order of overseas equities (56.3%), domestic equities (23.0%), overseas bonds (18.7%), and domestic bonds (11.9%).

The center expects bond-type returns to decline in a zero-interest-rate environment and analyzed that both equity and bond-type overseas funds have higher returns and greater variance compared to domestic funds.

Jung Na-ra, Senior Researcher at Mirae Asset Investment and Pension Center, said, "Over the past 10 years, as interest rates have fallen, the proportion of bond-type assets in variable insurance has increased compared to the past. Since bond-type assets have limited growth potential going forward and overseas equities tend to perform better in long-term return distributions, it is necessary to actively look overseas and pursue global asset allocation."

This content was produced with the assistance of AI translation services.