Saving Safely and Profitably
Saving Safely and Profitably
  • 김태연 기자
  • 승인 2006.05.03 00:00
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   Until not so long ago, financial planning was an area restricted to experts. However, now it is becoming more familiar to ordinary people as banks begun to offer various investment products along with information and advice to help the average layperson meet his or her financial goals.
   As many students start earning money by themselves through internships and part time jobs, they too are starting to get more interested in different systems of investing and saving and the benefits they offer.
   One director at Shinhan Bank was interviewed about popular investment products for the non-experts. According to the director, they fall into two general categories: mutual funds and high-yield savings accounts.
   Mutual Funds
   Mutual funds are a system where banks or other investment companies pool money from several customers to invest in the stock on bond market. The bank takes a small percentage of the profit, but most goes to the customer. They typically try to choose an investment strategy that will increase profit without too much risk. Because the bank, or its subcontractor, make all the stock purchase and sales, customers do not have to acquire knowledge of different stocks or keep track of the rate changes.
   Mutual fund investments can be divided into two main types, equity (stock) funds and bond funds, though some funds mix both types of investing. Additionally, customers can choose to invest a lager amount of capital at once or to make a regular contribution to an accumulating fund.
   In a stock fund the bank tries to pick highly profitable companies' stocks in which to invest its customers' money. Same stock funds offer a chance of high profit in a relatively short period of time but carry some risk of failure. Other stock funds may seek a lower rate of return over a longer time, but offer greater stability. The investment period may vary depending on the item, and the lowest amount of investment is generally 100,000 won. A typical stock fund can offer between 0.63 to 2.50 percent profit over a period of one to three years. The most important thing to remember about a stock fund, however, is that its returns are never guaranteed because they are dependent on the stock market, which can go up or down.
   Bond funds are more stable than stocks and offer greater safety because bonds do not vary like stocks do. So, they are suitable for people who wish to invest steadily for a short period of time. A maximum bond investment is usually about 5,000,000 won. The shortest term offered at Shinhan Bank is three months, but if one wishes to invest for longer time period, it is possible. Typical bond funds offer around 3 percent profit after six months.
   An accumulating fund is one where the customer signs a contract with the bank to contribute a regular amount of money to the fund each month. These funds are usually chosen by people who want to achieve goals such as saving fund for marriage, study abroad, buying a house, or retirement. The terms for these funds vary, but a typical investment period is three years or more, and the lowest investment per month is around 50,000 won.
   Lastly, some funds offer a mixture of above systems. For example, a customer could open a mixed stock and bond fund with a large initial deposit plus an agreement to make regular contributions monthly. The advantage is that it usually offers a higher rate of return than a regular accumulation fund, based on the large initial deposit, and also allows subsequent deposits to earn this higher rate.
   High-Yield Savings Accounts
   Instead of a mutual fund, it is also possible to get better profits than you would from a normal savings accounts if you open a high yield accounts. These accounts work somewhat like an accumulation plan for a mutual fund in that you sign a contract with the bank to deposit a certain amount of money each month (or else a large deposit at the beginning) in return for a guarantee of higher profits. Unlike a mutual fund, profit from these high-yield savings accounts simply comes from the bank's operating profit and is guaranteed by the bank. So, there is nearly no risk, but the amount of profit is also less than a mutual fund. A typical high yield account will give you 0.1 or 0.2 percent profit per year depending on your deposit amount. Some of Shinhan Bank's most popular accounts are the "My Home Plan," the "Lady Plan," and the "Accumulating Savings."
   The My Home Plan is especially designed to save money to buy your own house. There are no restrictions on admission except one has to be the head of a household. When opening the account, the customer sets a target amount of money, and the initial deposit and monthly contributions are based on that target.
   These accounts are also generally linked to government housing plans, so, after two years of saving, account holders are also eligible to reserve new houses or apartments.
   The Lady Plan was newly introduced when Chohung Bank and Shinhan Bank merged this April. Women over 18 years old are eligible to open accounts, and, if they meet guidelines set by the bank, holders receive various benefits: free medical examinations and discounts at women-oriented businesses like Hyundai Home Shopping, Duo, and Mode Tour Company.
   Finally, if you wish to open a high-yield account but don't fit in one of these special categories, Shinhan offers a general Accumulation Savings plan. There are also over 2,000 companies that offer plans similar to Shinhan Bank's. Earning money from money is another way to become rich.

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