My First Year of Personal Finance as a New Grad (Savings Accounts vs. ETFs)
Around this time last year, I got my first paycheck and was wondering what to do first with my finances. Now that a year has passed, I’m writing it up. Hope it helps someone.
1. Emergency fund first
- I always keep three months’ worth of living expenses in a high-yield savings account. Without this, you’ll lose your mind when you take losses in stocks.
2. Only use installment savings when you have a goal
- If you open one just for the sake of “investing,” the ~3% interest rate can’t keep up with inflation. Only when you have a specific goal, like a jeonse deposit or wedding funds.
3. Invest in ETFs via dollar-cost averaging
- At first, I tried to time the market and wasted three months. Setting up automatic purchases on a fixed day each month means I don’t have to think about it, and it’s convenient.
4. Conclusion
- Emergency fund → a small amount into a pension savings account → the rest into automatic ETF investments. For someone just starting out, this order seems sufficient. Getting started is half the battle anyway.
6 answers
Even if it’s just a small amount, always contribute to pension savings—the 16.5% tax credit beats a 3–4% annual interest rate by a mile. In the first year, even 1 million won feels significant.
I don't think it's right to dismiss savings accounts in the 3% range. Where else can you get guaranteed returns? With ETFs, if you go negative, you end up losing your principal.
Which parking account has the best interest rate these days? I'm using one with 3.0%, so please let me know if there's a better option.
Emergency fund first, this is facts fr
I also tried to time the market and just couldn’t get in last spring lol. I ended up getting in late in May, but after setting up automatic buys and not paying attention, my returns actually turned out better. But don’t just buy any ticker—going with S&P 500 or Nasdaq ETFs is better for your mental health.
Regular ETF investing isn’t a silver bullet. When the market enters a -30% range, most people stop their automatic buys, and that’s the most important moment—but the post doesn’t mention it. And are you recommending pension savings knowing it’s locked up until age 55? I think it’s a bit risky to lock up all your liquidity at a time when people early in their careers are likely to need a lump sum.