Refer Report

A client who is about to retire recently came to me. He asked for advice on how to manage his assets in the future, saying, “I have an apartment and 1 billion won in time deposits.” If this client maintains a monthly spending lifestyle of 8 million won, the period of time he can survive with 1 billion won in cash (assuming 3% annual compound interest) is less than 12 years. If the money is used for children’s weddings, etc., the period will be much shorter.

In order to live a stable life in retirement, increasing operating income can be a good alternative. At least until the age of 70, increasing the size of assets and then establishing a withdrawal strategy will be a stable retirement financial plan suitable for the ‘100-year era’.

The recent interest rate trend is downward. The interest rate on retirement pension deposits is in the late 2% range, and the interest rate on savings bank deposits is in the mid-3% range. This means that the asset growth effect of time deposits is decreasing. If you save money in time deposits, you will incur tax burdens such as interest income tax and comprehensive financial income tax.

It is important to increase long-term returns and reduce tax burden by utilizing tax exemptions and tax deferrals. To this end, we propose a portfolio that invests in five asset groups. First, we propose a portfolio that invests in five asset groups with low surface interest rates.
Invest in low-coupon bonds (investment ratio 30%)
Let’s do it. The interest rate is low, so the tax burden is reduced, and when interest rates fall, you can make a large capital gain. For example, if the interest rate on a 10-year bond falls by about 1 percentage point, you can make a capital gain of 10%.

Next
Variable insurance products (20%)
Let’s enjoy the tax exemption and tax deferral effects. Variable insurance can be used as a pension asset after retirement. Third, the 5-year fixed-rate type
Savings insurance products (10%)
In addition to tax benefits, you can expect higher returns than deposits.

As there are concerns about an economic downturn, stocks with relatively low volatility are recommended. Domestic high-dividend
Stock (20%)
If you invest in it, you can receive dividend income and also make capital gains if the stock price rises in the future. For US stocks, it is recommended to include high-quality high-dividend stocks and products tracking the S&P 500 index and NASDAQ 100 index (20%).

Jeong Seon-mi, PB Team Leader, KB Gold & Wise The First Banpo Center

Source: Korean