"19% a Year Tax-Free—Better Than Stocks?" ... 'Youth Future Savings' to Return Next Month After Savers Flocked to It

[Financial News] A high-interest savings account for young people will return next month. It is the 'Youth Future Savings' account, under which the government adds a contribution based on a set percentage of deposits and exempts interest income from taxation. Taking the government support and tax benefits into account, the product can deliver an effect equivalent to an annual interest rate of about 19% on a regular installment savings account.

On the 24th, financial authorities announced that they will accept applications for the second round of the Youth Future Savings program from October 7 to 16 to help young people build assets.
The Youth Future Savings account is a policy financial product under which the government contributes a set percentage of the amount deposited by participants, who can freely deposit between 1,000 won and 500,000 won each month for three years. It also provides a tax exemption on interest income.
In particular, if next year's government budget proposal is finalized after parliamentary review, the government contribution matching rate for the preferential type is expected to rise to 15%. The rate will increase to as much as 25% for employees at small and medium-sized enterprises in regional areas.
If a participant deposits 500,000 won every month, the 18 million won in principal paid over three years will be supplemented by the government contribution and interest paid by the financial institution. Unlike regular installment savings, the government directly adds money to the deposits, significantly increasing the effective return.
The product is expected to attract strong interest from young people because they can receive government contributions without taking on the separate investment risks associated with stocks or funds.

Applicants must be between 19 and 34 years old. In this application round, those born from November 17, 1991, through November 27, 2007, can apply. For those who have completed military service, up to six years of service will be excluded when calculating age.
Under the current criteria, eligible applicants are young people who are wage earners with total annual pay of 75 million won or less, or small business owners with annual sales of 300 million won or less, and whose household income is no more than 200% of the median.
During the first two days of applications, October 7 and 8, an odd-even system based on the final digit of the applicant's birth year will apply. From October 12 to 16, applications will be accepted regardless of the applicant's birth year.
Eligibility screening will take place from October 19 to November 13. Applicants who pass the screening can open an account at participating financial institutions from November 16 to 27.
A notable feature of this second application round is that holders of the Youth Leap Account will again have the opportunity to switch to the Youth Future Savings account.
Those who wish to switch must first apply for the Youth Future Savings account, complete the screening process, and receive notification that they are eligible to join. They must then open a Youth Future Savings account and apply for special early termination of their Youth Leap Account in order to join the Youth Future Savings program.
[email protected] An Ga-eul Reporter