Hello, this is Money. October is already approaching. I think the end of September and the beginning of October will be an important period, both for those involved in low-risk products and for those investing in portfolios. To put it more technically, it seems like it will be a turning point. I've been discussing this for a while, mentioning in our monthly low-risk product reviews that interest rates are likely to decrease. So, I will cover two main points. This video will be a bit long, but I will briefly explain the economic situation from the perspective of low-risk products. Secondly, I will talk about the products. I will explain each of the low-risk products that we have classified on the Money High channel and briefly describe their current status so that you can make informed choices.

I hope you can understand my opinion. I want to share some thoughts with you as if you were my family. This isn't something I’m insisting you do. First, let’s talk about economic matters. Interest rates have been the biggest issue lately. If you look at the U.S. and South Korean benchmark interest rates, you'll see that since December 2020, rates have been continuously increasing. In the United States, they have risen to 5.5%. I had advised against investing in U.S. dollar-denominated bonds, as their interest rates were high—some reaching around 5.8%. However, in South Korea, while the benchmark rate was raised, it did not reach the 5% level and remained at around 3.5%. There were concerns about the interest rate gap between the U.S. and South Korea, with some saying that our country would face dire consequences, but that hasn’t happened. South Korea's exports have been quite robust.

It’s good news, but in September, the United States lowered interest rates. So, news outlets are reporting that the U.S. has made a cut, reducing rates by 0.5% for the first time in four years, signaling the start of an era of rate cuts. In our country, news is suggesting that a rate cut is likely in November. The question is whether our country will raise or lower rates. We are currently dealing with savings accounts and low-risk products, and short-term bonds will be more affected by these changes. However, our country is currently in a somewhat burdensome position regarding lowering rates. This is because housing prices continue to rise. Even with rates increased, housing prices, which had dropped, are now trying to rise again. When housing prices increase, it leads to a serious problem: the polarization of assets intensifies.

The wealthy continue to get richer, while those without assets feel a relative sense of deprivation. Therefore, policymakers, when deciding on matters like interest rates, express concerns that rising house prices are becoming burdensome. If house prices rise too much, it could be seen as a policy failure, and a change in government could also occur. Politicians find themselves in a challenging situation. 

To explain further, while our country's economy may be doing well in terms of exports, domestic consumption is not performing well. When we talk about domestic consumption, we refer to the purchasing of goods or engaging in economic activities. If domestic consumption is poor, for instance, if we try to sell cars to the people of our country, but they don't have money to buy them, then Hyundai won't sell cars. If Hyundai doesn't sell cars, they won't hire, and if they don't hire, then the people won't have jobs.

The number of people who want to buy a car has decreased again, which will continue the vicious cycle. Therefore, they are trying to change this by lowering interest rates through policy. In other words, the economic situation is not good, so there is an incentive to lower interest rates. However, if exports are doing well and domestic demand is not as bad as expected, then the decision to lower the base interest rate in our country might be postponed. It could be moved from October to November, or even pushed into next year.

Now, the second point I want to discuss is the situation of banks. When we consider investing in low-risk products, we need to have some criteria for comparison. I have mentioned the deposit interest rates every month. I talked about what the deposit interest rates are and how they compare to the low-risk investment products we are considering. So, I would have suggested that there are some merits to these products based on that comparison.

Currently, if we look at the savings and deposit situation, there is a unique product offered by a savings bank with an interest rate of about 4.2% for a six-month deposit. There are no special conditions, so it seems reasonable. However, the problem is that while the deposits issued by this savings bank may have some merits, I think this bank might be a bit risky. This is something that can vary from person to person. Some experts might say that it's fine, but for someone like me, who remembers the investment situation in the 2010s and the issues that arose with savings banks, it can become quite bothersome, and I would prefer to avoid that. If we refer to the news, mentioning the savings bank directly might be a bit sensitive, so let's keep this conversation among ourselves. The savings bank in question has reported an operating loss of 549 million won.

There has been a significant increase. If the operating loss is 54.9 billion won, that's quite a large amount. So, even though deposit protection is in place, I wonder if it's really okay to deposit money in a company that is facing such huge losses. Moreover, the situation of other savings banks isn't particularly good either. Due to real estate project financing, the losses for savings banks are continuously increasing. Because of this, in a high-interest rate environment, depositing money in savings banks doesn't seem to have that much merit; it doesn't feel very safe. Therefore, instead of those savings banks, general commercial banks or regional banks like NH and Jeonbuk Bank offer more attractive options, with interest rates currently fluctuating between about 3% and 4%. It would be good to keep that as a reference. Now, let's move on to the third point: the list of low-risk products.

I've been working on writing a book lately, and I'm discussing various low-risk products. This might make my explanations a bit lengthy. The first topic is short-term bond ETFs. When we talk about short-term bonds, we mean products that involve lending money for a short period, which generates interest accordingly. For instance, there are various products like the Anji Hyang A short-term bond and the Money High short-term bond. These different short-term bonds are bundled together into one ETF, which acts like a single investment pocket. So, when we invest, we're essentially putting our money into this single pocket. However, when including various products, some ETFs might contain slightly riskier products, meaning they include bonds that potentially offer higher returns, while others focus on short-term bonds.

There are some differences when you look at the list of relatively stable investments available for short-term bond investments in our country, which generally include about seven options. Among these, the products that have merit in terms of yield are the Plus Short-Term Bonds. If you want to pursue more stability, there is a product called KODEX Short-Term Bonds Plus. As for other products, I have written about them on my blog, so please refer to that. If my younger sibling wants to manage some emergency funds, I think these two ETFs I just mentioned would be a good choice. If you have a lump sum, say 10 million won, and you're not sure when you'll need it, whether in six months or a year, you could invest in these products to keep your emergency funds and earn some interest.

That would be the situation I explained. Next, the second thing I will explain is the short-term bond fund, which has deposit dividend rates of around 5% to 6%. However, ETFs were around 3% to 4%, right? Why is it 5% to 6%? To explain, ETFs are composed mainly of government bonds, meaning bonds issued by the government, with a little bit of corporate bonds included. In contrast, these short-term bond funds have a smaller proportion of government bonds and a much larger portion of corporate bonds. As a result, the risk for ETFs is lower, and the returns are also lower, while for funds, the risk is higher, and the returns are potentially greater. So, I have put a trap here: the Eugene Champion Short-Term Bond includes medium-term bonds, which generally carry a bit more risk.

Short-term bonds are funds that we need to choose carefully. If my younger sibling comes to me and asks me to pick out the ones that are not suitable, the first thing to consider is that medium-term bonds are included in the short- to medium-term category, which means the yield fluctuations can be larger than expected. We are trying to choose low-risk products that have relatively stable returns, similar to savings accounts, so we should exclude these medium-term bonds. 

Secondly, ESG short-term bonds have special features. Although ESG can be a bit complicated, they come with various functionalities. Essentially, there’s an additional performance filter included. Therefore, I think there’s no need to consider these types of bonds; please choose better options. 

Furthermore, this fund generally has higher fees. However, if you look carefully, there are some funds with lower fees and decent yields.

There are good products like this. For example, products like the Core Rate Select Fund have a fund size of about 1.3 trillion won, which is quite large, and the fee for these funds is around 0.2%, so it’s not very high. These options have decent returns, so I think they could be a good choice. Now, should we choose a short-term bond ETF or a short-term bond fund? If you were in my position, what would you do? I would ask that too. As for me, I invest a lot, and I tend to invest quite a bit in stocks. I don’t talk about it on YouTube, but since I invest a lot, I would use these products for my emergency funds. Because I have many aggressive assets due to my stock investments, I need to manage my emergency funds as safely as possible.

Because of that, I will choose such ETFs. However, from your perspective, you probably won't be doing much aggressive investing. We are currently in a situation where we are doing savings and practicing with low-risk products. It might not be a bad idea to choose funds or other products with higher volatility to gain some experience. Do you understand? 

These issued notes can only be issued by securities firms in South Korea. However, platforms like Toss sometimes facilitate these and offer special sales. Additionally, the returns are currently around 3% to 4%, and a product mediated by Toss has an attractive rate of about 4.3%. So, if you have a lump sum of money but haven't learned about investing yet and feel the need to keep it safe, you might consider the products sold by Toss in Korean investments.

Joining the issuance of securities seems like a decent choice. It's a fairly safe option. However, the downside of issued notes is that, from our family's perspective, there isn't much to learn. When you invest in short-term bond ETFs, you can see the fluctuations in returns, and how interest rates and economic conditions affect them. This makes learning more natural, similar to driving a car. However, if you tie your money up in issued notes, you will probably just leave it there without much engagement. Even after three to six months, there isn't much to study, and the risks aren't that significant. So, there is a bit of a downside to this. The next product is over-the-counter bonds, and currently, we have Kyum Securities.

I have created a list of various investment securities in Korea, particularly focusing on bonds. The credit rating is A minus or higher, and the yields are not bad. I have filtered for those with a maturity of three years or less. As those of you who are watching this video know, bond prices and yields are gradually worsening. It seems like interest rates may be lowered, and risks are decreasing, which is causing bond yields to decline. However, as shown here, companies like Kiwoom Securities are currently conducting special sales, and Lotte Capital and Qoon Capital are issuing bonds. I am considering what Qoon Capital is like.

Before moving on to portfolio investment, there is a lot to study regarding serious investments. That's why I include discussions about bond funds in my reviews. Next, I want to explain ELBs, which are products like ELB and DLB. Recently, Toss has been launching many DLB products as special promotions. However, at the end of September, when I am recording this video, there aren't any particularly advantageous products available. One noteworthy option is the High 5 ELB offered by Namoo Securities, which is currently open for subscription until October 2. The underlying assets for this product are KB Financial and Samsung Electronics, with an investment period of about one year. If the performance of KB Financial and Samsung Electronics exceeds 103% at maturity, the product will yield a 7% return. This is what we can expect if we invest in KB Financial.

If you invest in Samsung Electronics and make a 3% profit, your overall asset profit will only be 3%. However, if you are lucky and invest in 2B, you could potentially achieve a return of around 7%. The downside is that you might invest in Samsung Electronics or KB Financial and see a profit of 10% or 20%, but then end up with only a 7% return from your ELB investment. This creates a ceiling effect. On the positive side, ELB products generally do not result in a loss of principal when you invest. Unless you request early termination or early redemption, if the return is below 103%, you simply won't see any profit, but you can retrieve your principal intact. Looking at the current chart of Samsung Electronics, it appears to be falling continuously, like a waterfall, from this point to that point. In any case, this is the situation, and there are ways to prevent such scenarios.

Before making significant investments, you can practice by investing small amounts in products like ELB. This way, you can observe economic conditions and stock market situations without taking on much risk. It's not a bad idea, especially since there are options with around 7% returns. The minimum subscription amount is currently about 1 million won, so considering it as a learning opportunity, why not try investing that amount? In my opinion, regarding other products from Hanwha Investment & Securities or KB, I think there isn't much merit in those options at the moment. It's too complicated; explaining something like a knockout product would require a lengthy video. I believe investing in something that difficult isn't very beneficial. That's what I've always thought.

I have explained many products. First, I talked about the economic situation. Interest rates have dropped in the United States, and we are in a situation where South Korea is considering whether to lower rates as well. There are concerns due to household debt and real estate. However, looking at the news, it seems likely that there will be a rate cut by the end of the year or early next year. 

Next, I listed and explained the products. I discussed short-term bond ETFs, short-term bond funds, and briefly mentioned commercial papers. I also noted that although long-term bonds have become less attractive compared to last month or the month before, it is still meaningful to study them. There was one good product in the ELB category, and I suggested that it might be worth trying from an experiential perspective. I will also review five other products.

I have seen the list, and you can pause the video to take a look at it. For those who want to study further, there are free lectures available on the Anji Han website, so please check that out. Now, I will conclude the review of low-risk products for this October. If you have any questions or anything else you are curious about, please leave a comment, and I will do my best to respond. Recently, I have received a lot of support from everyone, and I am very grateful. The fact that you leave comments is quite rare; I, too, usually don’t leave comments unless I feel really thankful. With that, I will end the video here. Have a happy day!

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