As the market eyes "ManSPI (KOSPI 10,000)," the Youth Future Savings, a policy product to help young people build assets, is being launched. Even though the stock market boom is dampening interest in deposits and savings, the financial authorities do not appear overly worried about demand.
The Youth Future Savings, which launches on the 22nd, will accept applications for two weeks until July 3 (excluding Saturdays, Sundays and holidays). It is a three-year, fixed-rate product that allows young people ages 19 to 34 to make flexible monthly payments of up to 500,000 won, and it is a program President Lee Jae-myung championed as a key pledge during the campaign and has overseen personally.
The base rate is 5% a year, and with preferential rates of 2 to 3 percentage points offered by each provider, the maximum annual rate can reach 7% to 8%. In addition, young people with annual income of 36 million won or less receive an extra 0.5 percentage point, and those who complete "Financial counseling for all young people" get an additional 0.2 percentage point. The providers are 15 institutions, including major nationwide, regional and specialized banks, internet-only banks, and Korea Post, with Suhyup Bank, KakaoBank, Toss Bank and Korea Post newly joining.
Although the stock market is booming, an official in charge at the Financial Services Commission (FSC) who has met with young people said there is little concern about demand. That is because the more financially savvy the young people are, the more they know it is safe and offers many benefits. Because all interest income from the Youth Future Savings is tax-exempt, when adding up the interest, contributions and tax-free benefits, the effective annual rate comes to 13.2% to 14.4% for the standard type and 18.2% to 19.4% for the preferential type.
With popularity in mind, the government has allocated a budget to support 3.2 million young people. An official said, "Young people in investment clubs know well that this is a youth-only safe asset guaranteed by the government. There is also strong demand to switch from the Youth Leap Account, so we are not considering additional incentives yet."