[Real-Life Finance] How to Escape 'Exchange Rate Poor'... Open a Dollar Account and Invest in RP

The Easiest Way Is Opening a Foreign Currency Deposit Account
Dollar RP Investment, Convenient for Short-Term Fund Use
If Actively Engaged, Consider Dollar ETF

It is an era where simply holding Korean won leads to becoming poorer. This is because the won-dollar exchange rate continues to soar daily, and the exchange rate is also on the rise compared to major currencies. The election of Donald Trump as the President of the United States and domestic political instability have collectively contributed to the rise in exchange rates, naturally drawing attention to 'hwan-tech' (foreign exchange investment).

The most notable foreign currency in the hwan-tech market is, of course, the dollar, the key global currency. It is regarded as one of the safest assets, and the won-dollar exchange rate has risen by more than 10% this year. The won-dollar exchange rate recorded 1,294.40 won at the end of last year and reached the 1,428 won level as of the morning of the 10th. Those holding dollars have effectively increased their assets, while those holding won have lost assets by the same amount. A hwan-tech strategy that allocates a certain portion of assets to dollars is becoming a necessity rather than a choice.

The First Step of 'Dollar Tech,' Foreign Currency Deposits

The most basic way to start dollar investment is through foreign currency deposits. Even beginners can easily access this. This product, known as a 'dollar account,' can be easily opened at major banks. It can also be opened non-face-to-face like a regular account. Depositors are protected up to 50 million won. The tax burden is also low. Since it is excluded from comprehensive financial income taxation, it is suitable for beginners whose annual financial income is not high. Comprehensive financial income taxation is a system where if an individual's total annual financial income (interest or dividend income) exceeds 20 million won, it is combined with other comprehensive income and taxed at a progressive rate.

Once the deposit account is opened, dollars can be purchased and deposited according to real-time exchange rates. When the exchange rate rises, one can convert back to won to realize gains or withdraw directly in dollars. It can also be used to store leftover dollars after overseas travel. The interest rate on dollar accounts, based on fixed deposits, is slightly higher than the base interest rate (3.00%). Among the four major commercial banks, as of the 9th, Hana Bank offers the highest rate at 3.3841%. However, foreign currency deposits incur a 1.75% exchange fee and a withdrawal fee of about 1 to 1.5%.

RP Advantageous for Short-Term Fund Utilization

Repurchase agreements (RP) are an investment strategy favorable for short-term fund utilization. RP is a method where securities companies invest in government bonds or high-quality corporate bonds and return the generated profits. There are also dollar products. Investment methods include free withdrawal types and fixed terms (from one week to one year). However, unlike foreign currency deposits, depositor protection does not apply, so safety is somewhat lower. While stability is slightly compromised, higher interest rates than bank deposits are guaranteed.

Although the base interest rate has recently been lowered, some securities companies still offer interest rates above 4%. Korea Investment & Securities offers an annual interest rate of 4.20% for 'fixed-term' RP ranging from one week to one year. Kiwoom Securities also offers RP rates up to 4.20%. When investing in RP, it is important to check the trading hours. Generally, it is from 9 a.m. to 3 p.m., but this may vary by securities company. Also, foreign currency RP does not automatically repurchase at maturity, so you must manually sell during trading hours.

ETF with Good Accessibility for Active Investment Consideration

The most active way to invest in dollars is to invest in exchange-traded funds (ETFs). They can be freely bought and sold like stocks, and profits are determined by the dollar exchange rate. The advantage is easy access with just a securities account. Dollar ETFs incur annual management fees of 0.2 to 0.4% and dividend income tax (15.4% on capital gains). There are also inverse ETFs that bet on a falling exchange rate, allowing operation in both rising and falling markets.

Representative ETFs with the dollar as the underlying asset include KODEX US Dollar Futures and KOSEF US Dollar Futures. As of the 9th, Samsung Asset Management's KODEX US Dollar Futures had a one-year return of 13.43% and a three-month return of 8.09%. Kiwoom Asset Management's KOSEF US Dollar Futures had a one-year return of 10.72% and a three-month return of 7.38%. Samsung Asset Management and Kiwoom Asset Management also operate leveraged and inverse products that track twice and negative twice the returns of the underlying assets, respectively. Mirae Asset Management operates only leveraged and inverse products: TIGER US Dollar Futures Leverage, which tracks twice the return, and TIGER US Dollar Futures Inverse 2X, which tracks negative twice the return.

Carefully Consider Platforms for Hwan-Tech Enthusiasts

If you decide to invest in dollars, it is also good to carefully consider platforms for hwan-tech enthusiasts. Recently, many platforms offer various services related to foreign currencies. 'Dollarich' provides real-time exchange rates and investment suitability analysis functions, helping beginners easily understand exchange rate trends. 'SwitchOne' offers a 100% preferential exchange rate and a service to freely exchange foreign currencies. 'Hana FX Market' supports a convenient hwan-tech environment with various functions such as foreign currency trading, reservation transactions, and exchange rate alerts. All are useful tools for beginner investors.