Growing a Sum for One Year Compared — Deposits, Savings Plans and Government Bonds

One year is too short to call it investing. Over a short horizon, what decides the outcome is not raising the yield but keeping the term and cutting tax and fees. Let's take 30 million won for one year and work through the products.

The basic formula

After-tax return = principal × rate × term − (interest × 15.4%)

Interest from deposits, savings plans and government bonds is subject to 15.4% separate taxation. That is why you compare rates after tax, not before. (If financial income exceeds 20 million won a year it becomes a separate comprehensive taxation question, but at the 30 million won level it usually does not apply.)

Product comparison (30 million won principal, example rates)

Product	Example rate	Pre-tax interest	After tax	Liquidity	Principal risk
1-year time deposit	2.8%/yr	840,000 won	about 710,000 won	Medium (early withdrawal cuts interest)	Deposit protection to 50 million won
Regular savings plan (2.5M × 12)	3.0%/yr	about 490,000 won	about 410,000 won	High (monthly deposits)	Deposit protection
1-year treasury bond (direct)	2.7%/yr	810,000 won	about 680,000 won	High (tradable)	Essentially none
Inflation-linked treasury bond	Variable	Tracks inflation	Tracks inflation	Medium	Rate and inflation change
Bond fund	Variable	After fees	Variable	High	Price change
CMA (MMF)	2.5%/yr	750,000 won	about 630,000 won	Very high	Low

The rates are examples. Check the rates a bank or broker publishes at the time you open the account.

The hidden calculation — why savings plans earn less

A savings plan rate (3.0%) is higher than a deposit (2.8%), yet the interest is smaller. Because you deposit monthly, the average time on deposit is only about half.

• Total deposited: 2.5 million × 12 = 30 million won
• Simple approximation: interest ≈ monthly deposit × (annual rate ÷ 12) × (1 + 2 + ... + 12)
• = 2.5 million × 0.0025 × 78 = about 488,000 won pre-tax

Since the 30 million won was not on deposit for the full year, the actual return against principal is around 1.6% a year. A savings plan is not a "higher rate" product — it is a device that forces you to save every month. If you already have the lump sum, deposits or bonds are better on paper.

Four criteria for choosing

1. Chance of early withdrawal — money you may spend within the year is not for a deposit. CMA or a cash account is the right answer. An emergency fund is not a return target.
2. Deposit protection limit — principal plus interest is protected up to 50 million won per bank. Above that, split it.
3. Fixed or variable rate — a 1-year deposit locks the rate at signup. Variable products fall with the benchmark.
4. Compound interest illusion — most 1-year products pay simple interest. There is effectively no compounding over a one-year window.

Choose for your own situation

• Money spent exactly one year later (moving, tuition) — a time deposit or 1-year treasury bond maturing when you need it.
• Spare money appearing each month — a savings plan to force the habit, then move it into a deposit.
• Money you cannot date — CMA or a cash account. Trade yield for liquidity.

Summary

Across these products, the after-tax difference over a year is within roughly 100,000 won on 30 million won. Rather than spend time narrowing that gap, it pays more to build a structure that will not be broken early. Treat the numbers as examples and build the plan around your own calendar.