"More Savings Than Stocks"... Changing Money Management of MZ Generation

As Stock Market Slumps
2030 Turns to Safe Assets
Interest in Youth Hope Savings and Time Deposits
President-Elect Yoon's '100 Million Account' Pledge
Banks Launch High-Interest Products
Savings Banks and Banks Heat Up Competition

#Kim Sun-hee (32), an office worker who usually poured her spare funds into stock investments, recently signed up for the Youth Hope Savings Account. She believes that accumulating a certain amount of principal is necessary to make a large sum through reinvestment. Kim said, "In the current stagnant stock market, I judged that a stable investment of about 500,000 KRW per month is necessary," adding, "I plan to grow my money through safe assets over the next two years."

#The ‘M-With Yu Fixed Savings’ offered by DB Savings Bank, with a top annual interest rate of 5.5%, sold out within two days of its launch on the 4th, exhausting its 30 billion KRW limit. It is a high-interest product that offers a basic interest rate of 3% per year and up to 2.5% additional preferential interest rates, including 0.5% for those aged 19 to 39. The savings bank industry, which had been distant from the youth demographic, was reportedly surprised by the unexpected popularity.

Youth Saving Money

According to the financial sector on the 14th, there is a heated interest among young people in their 20s and 30s in high-interest deposit and savings products. The Youth Hope Savings Account, launched by the government, attracted about 2.9 million people, roughly eight times the initially expected 380,000. Among young people who had been rushing into stocks and coin investments like moths to a flame, a craze for steadily saving money every month to build a lump sum is spreading. Due to external risks such as the Ukraine crisis causing a stagnant stock market and rising interest rates, their money is naturally moving into financial sector savings products, analysts say.

This trend was ignited by government policies. The Youth Hope Savings Account, launched last month, is a product for those aged 19 to 34 with an annual income of 36 million KRW or less. It allows flexible monthly deposits up to 500,000 KRW with a maturity of two years. If deposits are made until maturity, in addition to bank interest, the government provides a savings incentive of up to 360,000 KRW, and interest income tax is exempted. Thanks to tax-free benefits, an effective interest rate of up to 10% can be enjoyed. The surge in youth interest was so intense that errors occurred when accessing commercial bank applications, prompting the government to consider resuming sales around July to August.

President-elect Yoon Suk-yeol’s Youth Leap Account is also attracting great attention, being called the ‘100 million KRW account.’ Even before its launch, young people online have been continuously analyzing the conditions of the Youth Leap Account. This account targets working youth aged 19 to 34, allowing them to save a certain amount up to 700,000 KRW per month, with the government supporting up to 400,000 KRW monthly, aiming to accumulate 100 million KRW over 10 years. The target group is broader than that of the Youth Hope Savings Account, and the support amount is higher. However, government benefits vary depending on income. Youth with an annual income of 24 million KRW or less save 300,000 KRW monthly, with the government supporting 400,000 KRW. For those earning up to 36 million KRW, the youth save 500,000 KRW and the government supports 200,000 KRW; for up to 48 million KRW, youth save 600,000 KRW and the government supports 100,000 KRW; and for those earning over 48 million KRW, the youth pay 700,000 KRW. For youth earning over 48 million KRW, some tax deduction benefits are provided on part of the deposit.

Banks Compete with High-Interest Products

Experts predict that the craze for accumulating lump sums will continue for a considerable period. In particular, the interest sparked by the government’s Youth Hope Savings Account has led even young people who do not meet the conditions to turn their attention to banks’ deposit and savings products. Moreover, savings banks and internet-only banks are competitively launching high-interest products to attract these customers, further intensifying the atmosphere.

In fact, the National Credit Union Federation of Korea launched the 4th Plus Fixed Savings on the 3rd, offering an annual interest rate of up to 8.0%, linked with Shinhan Card. K Bank’s ‘Hot Deal Savings X Woori Card’ applies a basic interest rate of 1.8% and preferential interest rates up to 8.2% depending on Woori Card usage, providing an annual interest rate of up to 10%. Welcome Savings Bank introduced the ‘Welcome First Transaction Preferential m Fixed Savings’ on the 1st, offering up to 5.5% annual interest.

Professor Seo Ji-yong of Sangmyung University’s Department of Business Administration said, "In the case of savings banks, as interest rates rise, loan rates also increase, but savings rates are also raised. Internet-only banks tend to raise rates together because their deposit base is weak, leading to competition." He added, "From the user’s perspective, there was no incentive to use banks under a low-interest rate regime, but with these products being competitively launched, funds that had been concentrated in the stock market may flow out and move into the banking sector."

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