Navigating the New Landscape of Secure Investments: Beyond Traditional Savings
Recent surges in the KOSPI and a general influx of funds into the stock market have led many to believe in the potential for high returns. However, recent market volatility, including declines in US tech stocks and domestic equities, has reminded investors of the inherent risks. Many are seeking safer havens, turning their attention to deposit-like products offering potentially higher yields than traditional savings accounts.
The Rise of Principal-Protected Products
Investors are increasingly drawn to financial products that promise to safeguard their initial investment while offering a better return than standard deposit accounts. Several options are emerging, each with its own nuances and risk profiles.
Issuance Certificates (발행어음): A Close Relative of Deposits
Issuance certificates, offered by securities companies, function similarly to deposits, providing a fixed interest rate for a term of one year or less. These have become popular “special offers,” quickly selling out upon release. However, unlike traditional bank deposits, issuance certificates are not protected by deposit insurance. Which means investors are exposed to the risk of loss if the issuing securities company fails. These products are typically offered by large, financially stable “comprehensive investment business operators” (종투사).
Currently, seven securities firms – Korea Investment & Securities, Mirae Asset Securities, NH Investment & Securities, KB Securities, Kiwoom Securities, Shinhan Investment and Hana Securities – offer issuance certificates. Interest rates generally exceed those offered by major commercial banks. As of February 2026, KB Securities offers 3%, Mirae Asset and NH Investment offer 3.05%, and Korea Investment offers 3.2%. Newer entrants, like Kiwoom (3.25%) and Shinhan Investment (3.3%), are offering even more competitive rates. Hana Securities has offered special rates of 3.6% to new and dormant customers, and Shinhan has a limited-time offer of 4% for those aged 20-30.
IMA (종합투자계좌): Performance-Linked Returns
Introduced in December 2025, IMA (Comprehensive Investment Account) offers the potential for higher returns than issuance certificates, but with a degree of risk. IMA products are “performance-linked,” meaning returns are tied to the performance of underlying investments, such as M&A deals. Korea Investment and Mirae Asset Securities currently offer IMA products, with a target annual return of 4%. The structure involves sharing excess returns above the target with the securities firm, typically on a 40/60 split.
For example, a ₩10 million investment with a 10% return (5% annually) could yield ₩920,000 after deducting fees and taxes, compared to ₩592,200 for a similar investment in an issuance certificate or traditional deposit. However, IMA products often have a fixed term (2-3 years) and may not offer any return if performance targets are not met.
ELB (주가연계파생결합사채): Linking Returns to Market Performance
ELBs (Equity-Linked Bonds) offer returns linked to the performance of specific stocks, like Samsung Electronics, or market indices, such as the KOSPI. While potentially offering higher returns than issuance certificates and IMA, ELBs also carry a greater degree of risk. A key advantage of ELBs is their eligibility for investment within a tax-advantaged ISA (Individual Savings Account), reducing tax liabilities.
ELBs often have conditions that must be met to receive the full promised return. However, some ELBs offer a guaranteed minimum return even if the conditions are not met. For instance, an ELB linked to Samsung Electronics might offer a 5.01% return if the stock price doubles by maturity, but also guarantee a 5% return even if the price doesn’t reach that level. This makes them a potentially attractive option for risk-averse investors seeking a higher yield than traditional deposits.
Understanding the Risks and Rewards
While these products offer attractive alternatives to traditional savings, it’s crucial to understand the associated risks. Issuance certificates lack deposit insurance, IMA returns are not guaranteed, and ELBs are tied to market performance. Careful consideration of your risk tolerance and investment goals is essential before investing.
FAQ
Q: Are issuance certificates safe?
A: Issuance certificates are not covered by deposit insurance, so there is a risk of loss if the issuing securities company fails.
Q: What is IMA?
A: IMA is a performance-linked investment account that offers the potential for higher returns, but also carries risk.
Q: What are the tax benefits of ELBs?
A: ELBs can be held within a tax-advantaged ISA, reducing tax liabilities on investment gains.
Q: Which product offers the highest potential return?
A: ELBs generally offer the highest potential return, but also carry the highest risk.
Q: What is a 종투사 (jongtusa)?
A: A 종투사 is a comprehensive investment business operator, a large and financially stable securities firm authorized to issue certain investment products.
Did you know? Investing through a tax-advantaged ISA can significantly increase your overall returns by reducing your tax burden.
Pro Tip: Carefully review the terms and conditions of any investment product before investing, paying close attention to the risks and potential rewards.
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