'Individual Savings Account' (ISA) Surpasses 40 Trillion Won

An Increase of 7.5 Trillion Won in the First Half of This Year...
The Largest Semiannual Growth on Record

The Individual Savings Account (ISA), which was introduced in March 2016 to support asset formation through comprehensive asset management for the public, has surpassed a total subscription amount of 40 trillion won in 9 years and 3 months.

According to the Korea Financial Investment Association on July 30, as of the end of June, the total subscription amount for ISAs stood at 40.3847 trillion won, with 6,316,000 subscribers.

This represents an increase of 7.5 trillion won since the end of last year, when the amount was 32.877 trillion won. This is the largest increase ever recorded over a six-month period. The number of subscribers also rose by about 330,000 during the same period, from 5,985,000 at the end of last year.

The ISA is an account-type product that allows investment in a variety of financial products, such as domestically listed stocks, ETFs (Exchange Traded Funds), funds, REITs (Real Estate Investment Trusts), as well as savings and installment deposits, all within a single account, while also providing tax benefits.

The biggest advantage of the ISA is tax savings. After a certain period, profits and losses among financial products within the account are offset, and based on the net profit, up to 2 million won (up to 4 million won for the basic type for low-income individuals) is tax-exempt for the general type. Amounts exceeding this are subject to a low separate tax rate of 9.9%.

The subscription amount and number of ISA subscribers have continued to increase since the introduction of the 'investment brokerage-type ISA' in 2021, which allows subscribers to directly invest and manage financial products.

By type, the investment brokerage-type accounted for 24.3266 trillion won, representing 60.2% of all ISAs. The trust-type recorded 15.0278 trillion won (37.2%), and the discretionary-type recorded 1.0302 trillion won (2.6%).

Both the trust-type and discretionary-type allow investment in financial investment products such as stocks, ETFs, and funds, so there is little difference from the investment brokerage-type in terms of investment options. However, in terms of management method, the trust-type is characterized by the subscriber giving management instructions to a trustee (such as a bank or securities company) for customized management. The discretionary-type is characterized by entrusting asset management to professionals based on a model portfolio presented by a bank or securities company.

In terms of the number of subscribers, out of a total of 6,316,000, the investment brokerage-type accounted for 5,290,000, representing about 83.8%. The trust-type had 905,000 subscribers (14.3%), and the discretionary-type had 120,000 subscribers (1.9%).

Looking at the main financial products by type, for the investment brokerage-type, ETFs accounted for 40.8% (10.2248 trillion won) and stocks for 34.3% (8.6006 trillion won). For the trust-type, savings and installment deposits accounted for 94.7% (15.1791 trillion won), while for the discretionary-type, funds accounted for 97.6% (1.09 trillion won).

By financial sector, driven by the popularity of the investment brokerage-type, the amount subscribed through securities companies reached 24.6526 trillion won (61.0%). Banks, which mainly handle the savings-focused trust-type, accounted for 15.732 trillion won (39.0%).

Lee Hwantae, head of the Industry and Market Division at the Korea Financial Investment Association, said, "Expectations for the stock market are higher than ever due to the new administration's strong will and active efforts to stimulate the economy and vitalize the capital market," and added, "If the ISA's tax benefits and incentives for long-term investment, such as expanding the eligible subscription age, are increased, it could serve as a catalyst to usher in the 'KOSPI 5000 era.'"

The Japanese government is also recognized for having significantly contributed to investment activation by making the expansion of tax-exempt benefits under the 'New NISA' (introduced in 2024 to replace the previous NISA) a key policy task, aiming to establish a virtuous cycle in the capital market through the promotion of long-term investment. As of the end of March this year, the number of NISA accounts stood at 26.47 million, with a total subscription amount of approximately 59 trillion yen (about 555 trillion won).