A savings account is a financial product where you regularly save money for a certain period and receive the principal and interest together at maturity. It is the most basic and secure method of saving for a lump sum.
Interest calculated only on the principal, no interest on interest. Simple to calculate but results in less maturity amount than compound interest.
Interest calculated on monthly deposits and existing interest. More advantageous for long-term savings and increases final returns.
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| Period (months) | Principal Deposit | Accumulated Amount | Interest | Rate of Return |
|---|
| Product Type | Risk Level | Rate of Return | Suitable For |
|---|---|---|---|
| Savings | Very Low | 1.5~4% | Stable Lump Sum Building |
| Deposit | Very Low | 1~3.5% | Growing Existing Lump Sum |
Price increases (inflation) reduce the real value of money over time.
The effect of compound interest increases with longer savings periods. Monthly compound interest is more advantageous than simple interest for long-term savings of 3+ years. The difference becomes even more pronounced for 5+ years.
When terminating early, interest is reduced to about 1/2-1/3 of the agreed rate. The reduction is greater for shorter subscription periods, and early termination rates vary by bank and product, so verification is needed before signing up.
Youth Advantage Housing Subscription Savings (ages 19-34), Income Deduction Long-term Funds (total salary below 50 million won), Individual Savings Accounts (ISA), etc. provide tax benefits. Suitable products vary depending on income and age.