New Year's Money Investment Starting at 5,000 Won... "Help Your Children Develop Investment Habits"

[Asia Economy Reporter Song Seung-seop] Choi Myung-hoon (39), a manager at a financial company, registered an account with an online investment-linked finance company (OnTu company) a few months ago to cultivate his child's investment habits. This is because small and diversified investments can be made starting from 5,000 won. He deposited 1.52 million won into the account for his 5-year-old son and 550,000 won into the account for his 3-year-old son, achieving annual returns of 7.4% and 6.7%, respectively. Choi said, "I plan to deposit part of the New Year's money my child receives this Lunar New Year."

Jang Il-hoon (38), who works at an IT company, is earning a 6% annual return through diversified investments in an OnTu company. Jang started putting the allowance his daughter, who just entered elementary school, received from relatives into an OnTu company account. Jang said, "I want to enjoy tax benefits while preparing seed money for my child," adding, "Minors can receive a deduction benefit of up to 20 million won every 10 years, so gifts can be made without tax."

The OnTu industry is gaining attention as an alternative investment destination. This is because investments can be made with small amounts and tax benefits can also be enjoyed. Recently, more people are showing interest in OnTu companies to cultivate their children's financial habits.

According to the OnTu industry on the 29th, 8Percent recently launched a 'Minor Investment Guide' service due to an increase in customer inquiries about registering investment accounts for their children. A representative from 8Percent said, "Inquiries about minor investments are steadily increasing," and added, "We inform customers that investments in OnTu companies can be conducted under the consent of guardians, similar to fund products."

Principal Loss Probability Drops to Single Digits with Diversified Investment

To open an account with an OnTu company for a minor, a guardian must fill out a consent form on the website. After sending the parent's ID card, resident registration certificate, family relation certificate, and a copy of the child's bankbook by registered mail, investment can begin. However, it is important to check whether the OnTu company is officially registered and whether it properly informs about the possibility of principal loss.

Industry insiders particularly emphasize the importance of diversification. The more bonds invested in, the more the possibility of principal loss significantly decreases. According to internal data analyzed by Lendit, as of the first half of last year, the probability of principal loss for those who invested in fewer than 100 bonds was 18.55%. However, for investment products with 101 to 200 bonds, it dropped to 5.7%, more than halving. When investing in over 300 bonds, it decreased to 0.52%.

Some also seek tax benefits through diversified investments. Since amounts less than 10 won are not taxed, 'rounding down to the nearest won' is possible. A representative from PeopleFund explained, "If you invest in one individual bond and earn 100,000 won in profit, you have to pay 27,500 won in taxes. However, if you earn the same 100,000 won profit by investing in 1,000 individual bonds, the tax reduces to 20,000 won." They added, "By investing an average of 2,000 won per individual bond (based on 50 bonds), the expected effective tax rate drops to the 1% range, which is expected to increase customers' net earnings."

Lee Hyo-jin, CEO of 8Percent, said, "Recently, parents are entrusting their children's allowances to new alternative investment destinations," and suggested, "Since no investment product guarantees principal like a deposit, we recommend approaching by diversifying small amounts across various investment destinations to expand experience."