[Wandering Yetech Tribe] ③ Finding Niche Products and Preparing for Interest Rate Decline

With Interest Rate Hikes Slowing... Survival Strategies for Wandering Yetekno Investors

[Asia Economy Reporter Yu Je-hoon] Jung Woon-hyung (35), who has been working for seven years, found himself in a dilemma earlier this month after the maturity of his deposit at a savings bank parking account ended, wondering what to do with his lump sum of 30 million won. Due to his conservative nature, he waited for commercial bank interest rates to exceed 5%, but despite the Bank of Korea's base rate hike on November 24, the interest rates on commercial bank deposit products remained stagnant. After much consideration, Jung deposited his lump sum in a postal savings product near his home offering a maximum annual interest rate of 5.35%. He said, "I heard that postal savings are guaranteed by the government," adding, "I think it was a good choice for now."

As the deposit interest rates of commercial banks, mutual savings banks, and mutual financial institutions, which once surpassed the 5% mark, have plummeted due to regulatory intervention, the 고민 of the financial-savvy group (yetek-jok) has increased. Those who believe that deposit interest rates have peaked are preemptively subscribing to long-term, high-interest products to prepare for future rate cuts, while strategically choosing deposit products from the first and second-tier financial sectors that have emerged as niche options.

According to the financial sector on the 30th, the 'Chorokbyeol Sarang Jeonggi Yegum' (Green Star Love Fixed Deposit) product sold by Korea Post Savings and Insurance is gaining popularity among yetek-jok who focus on 'stability.' This product has a base interest rate of about 3.35% per annum, but if the following preferential conditions are met ? ▲Internet preferential interest rate (1.40 percentage points) ▲Submission of carbon neutrality practice point subscription certificate (0.30 percentage points) ▲Participation in donations to Korea Post Public Interest Foundation partner organizations (0.20 percentage points) ▲No issuance of paper passbook (0.1 percentage points) ▲Participation in environmental guardian pledge (0.1 percentage points) ? it offers a relatively high interest rate of 5.35% per annum.

Although there are many preferential conditions, most can be fulfilled through non-face-to-face subscription or by simple settings in the application when subscribing to the product, making the hurdles relatively low. While Korea Post Savings Insurance is not part of the first-tier financial sector and is not covered by the Depositor Protection Act, the 'Act on Korea Post Savings and Insurance' stipulates that "the state is responsible for the payment of Korea Post savings (including interest)," providing considerable stability.

Some yetek-jok, believing that deposit interest rates have reached their limit, are subscribing to long-term, high-interest products to prepare for the future. For example, the 'KDB Hi Freedom Savings' sold by KDB Industrial Bank is a monthly compound interest free savings product that allows deposits without limits on amount or frequency up to 3 million won per month. The one-year maturity interest rate is 4.72% per annum, while the three-year maturity interest rate is 5.35% per annum. Additionally, if the automatic transfer preferential condition (0.1 percentage points) is met, it offers the highest interest rate among commercial banks at 5.45% per annum.

In particular, it is said that some yetek-jok operate multiple accounts with this product. The three-year maturity product offers a fixed interest rate of 5.45% per annum, which can be used as a high-interest product if deposit interest rates or base rates decrease after one to two years. The minimum monthly deposit amount is only 10,000 won, so the cost of maintaining the product is not burdensome.

The KDB Dream Freedom Savings product, also handled by KDB, is a recurring deposit product that allows deposits without limits on amount or frequency within a monthly maximum deposit limit of 5 million won. It offers an interest rate of 4.77% per annum for deposits of one year or more and 5.02% per annum for deposits of three years or more. With preferential interest rates applied, the interest rate can reach 5.12% per annum.

In addition, yetek-jok are showing interest in special rate products from mutual savings banks and mutual financial institutions that were popular this year, as well as revolving fixed deposit products. A financial sector official said, "Although the U.S. Federal Reserve (Fed) and the Bank of Korea have indicated the upper limit of interest rates, this does not necessarily mean an imminent base rate cut or a surge in asset markets," adding, "We expect the popularity of stable deposit products to continue for the time being."