Young people’s long-term collective investment securities savings, also known as “youth funds,” whic..

Young people’s long-term collective investment securities savings, also known as “youth funds,” which were shunned by the market despite income deduction benefits, are showing high returns due to a rebound in the domestic stock market this year. According to financial information company FnGuide on the 23rd, 28 types of youth funds as of the previous day recorded positive returns compared to the beginning of the year. During the same period, eight products exceeded the KOSPI’s 71.88% increase. The Mirae Asset Long-Term Growth Focus Youth Income Deduction Securities Investment Trust, which includes Samsung Electronics, SK Hynix, and Isu Petasis, rose 109.2% (based on A-class) during this period to become a Double Bagger (double the principal) fund. Products from Shinhan, IBK, and Hana Asset Management also recorded high returns.

Youth funds were launched in large numbers in 2023 thanks to the government’s income deduction benefits. Young people aged 19-34 with a total salary of 50 million won or less or a total income of 38 million won or less are eligible to join. Income tax deductions are provided up to 40% of the payment amount and up to 2.4 million won from the limit of 6 million won per year. Subscribers who belong to the tax base section of 14 million won to 50 million won will receive a tax refund of 396,000 won if they pay the maximum limit. The mandatory subscription period is three years, and an additional 6.6% tax is imposed upon termination in the middle.

The income deduction is only applied to subscribers this year. It is based on the purchase settlement date, so it needs to be noted. Although there are tax benefits, young people’s interest in youth funds has been low. Youth funds are stipulated to invest more than 40% of their portfolios in domestic stocks, which was largely due to the sluggish domestic stock market compared to the U.S. market until last year. As of the previous day, there was only one youth fund with a set amount of 10 billion won or more, and 20 products with less than 1 billion won.

However, with the domestic stock market led by Samsung Electronics and SK Hynix expected to benefit from the “memory semiconductor super cycle,” it is evaluated that the attractiveness of most youth fund products has increased.

An official from the financial investment industry said, “Young investors who expect the KOSPI to improve over the next three years deserve to consider joining the youth fund.”

[Reporter Jeong Jaewon]