[PB Notebook] Focus on High-Interest Products... Fixed-Rate Insurance, Dollar, ELS

Haksu Kim, Team Leader of Hana Bank Apgujeong PB Center

Although the Year of the Yellow Rabbit, Gimyonyear (己卯年), has dawned, the expressions of customers met at the branches are not entirely bright. Recent reports on economic growth rates and corporate earnings forecasts have heightened concerns that this year will also be challenging. Last year experienced an unprecedented rapid pace of interest rate hikes. Stocks, real estate, and other assets all turned into burdens. Those who foresaw this and converted their assets into cash earlier would have worried less, but many had to endure losses.

Market interest rates, which had been rising throughout last year, have recently been trending downward again. As short-term rates such as CD rates and 6-month financial bond rates fall, the 1-year fixed deposit rates at commercial banks, which even caused a 'reverse money move' phenomenon last year, have dropped from the 5% range to the 4% range recently. To overcome these difficult conditions in the new year, securing 'high-interest financial products' is recommended as a financial strategy.

One of the representative high-interest financial products gaining attention is fixed-rate insurance. Above all, it is safe and has a structure similar to long-term fixed deposits, with the advantage of allowing early cancellation at any time to secure opportunity costs. At the end of last year, a 5-year fixed-rate insurance product with an interest rate in the high 5% range sold like hotcakes, to the extent that bank computer systems were paralyzed. Customers who subscribed at that time secured considerable profits. With an interest rate in the high 5% range over 5 years, the interest amounts to a whopping 30%. Recently, a 5-year fixed-rate insurance product with an interest rate of about 4.80% has been introduced. Over 5 years, this secures 24% interest. Such opportunities are rare.

Another high-interest product worth noting is dollar-denominated products. The won-dollar exchange rate, which recently rose to 1,400 won, has repeatedly plunged and is now hovering in the high 1,200 won range. The normal exchange rate range was between 1,050 and 1,150 won. If the exchange rate falls below 1,200 won, it is recommended to buy dollars without hesitation. This is because the U.S. still has room to raise its benchmark interest rate further. Under normal circumstances, the U.S., with better creditworthiness than Korea, should have a higher benchmark interest rate, but currently, the interest rates between Korea and the U.S. are inverted. At such times, purchasing dollars at a low exchange rate to enjoy exchange gains and then placing them in foreign currency fixed deposits to earn high interest can yield a twofold benefit.

Finally, it is recommended to subscribe to some equity-linked securities (ELS). The stock market is expected to continue a long box range due to fatigue from sharp declines and a difficult environment for rebounds. ELS products are those where interest rates rise during stock market downturns, and recently, interest rates have been formed in the 5-8% range. ELS are stock index-linked products with a 3-year maturity and early redemption opportunities every 6 months. By appropriately utilizing 5-year fixed-rate insurance products, purchasing dollars followed by fixed deposits, and ELS products to stabilize your portfolio and achieve an annual return between 5-10%, you may be able to navigate this challenging market well this year.

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