Savings and Investments Serve Different Roles
Savings and time deposits pay principal and interest according to agreed terms. Investments do not guarantee returns and can result in a loss of principal. Instead of comparing only interest rates or past returns, compare taxes, fees, early-withdrawal terms, and the possibility of loss side by side.
When You Need the Money Matters More Than Your Age
Allocating assets based only on age—such as 30:70 in your 20s or 50:50 in your 30s—can overlook your actual circumstances. It is safer not to put living expenses or money you will need soon into highly volatile assets. Even with a long investment horizon, invest only within the range of losses you can afford to bear.
Check Emergency Funds and High-Interest Debt First
If you lack cash for unexpected expenses or have high-interest debt, organize your cash flow before deciding how much to invest. The amount of emergency funds you need depends on factors such as job stability, dependents, insurance coverage, and fixed monthly expenses.
Deposit Insurance Limits and Early-Withdrawal Terms
Starting September 1, 2025, eligible deposits and savings accounts are protected up to 100 million won per person per financial institution, including principal and the prescribed interest. Not every financial product is covered. Funds and performance-based products are not protected, and withdrawing from a savings account early may result in an interest rate lower than the contracted rate.
Past Investment Returns Are Not Promises
Past long-term stock index returns are for reference only and do not guarantee future returns. When comparing them, use consistent standards for the time period, dividend reinvestment, taxes, exchange rates, and costs. You can also consider spreading your money across multiple assets and regions instead of concentrating it in one asset.
The Order for Setting Your Allocation
First, write down when you will need the money and how much you will need. Next, assess the loss you can afford and the possibility of an interruption in your income. Then place short-term funds in low-volatility products such as savings accounts and time deposits, and allocate money you can leave invested for longer according to your goals and risk level. Review your allocation whenever your circumstances or goals change.