investors looking for better returns than bank deposit rates are turning to securities firms' short-term products. Offering high interest rates, RPs have grown to a market size of 100 trillion won, providing both safety and liquidity. MMFs have expanded to 233 trillion won, making them the optimal choice for emergency savings. Each of the three core products of short-term money management has distinctive strengths of high interest rates, safety, and liquidity, allowing investors to choose according to their objectives. as of October 2025, even amid the trend of interest rate cuts, these products have maintained interest rates 30 to 100 basis points higher than bank deposits, making them a popular alternative investment source.
table of contents
- why short-term financial instruments are gaining traction
- how to earn high interest rates with RPs
- Making short-term deposits safely with RP investments
- Differences between MMFs and MMF ETFs
- recommended Products for Different Investor Personalities
- frequently Asked Questions
- conclusion
why short-term financial instruments are all the rage
the hottest buzzword in the financial market in 2025 is short-term money management. this is because despite the Bank of Korea's interest rate cuts, short-term financial instruments from securities firms have maintained higher yields than bank deposits.
while bank receipts have fallen by 26 trillion won since the start of the year, money market funds have increased by 24 trillion won. The repurchase agreements balance has reached 99 trillion won and is on the verge of breaking the 100 trillion won mark. the commercial paper market also grew to KRW 40 trillion, expanding by more than 17% year-on-year.
there are clear reasons behind this short-term investment frenzy. while bank one-year CD rates are hovering around 2.0-2.8%, securities firms' short-term financial products still offer yields of 3% or more. investors want both the liquidity of an emergency fund and a higher yield than deposits, and commercial paper, repurchase agreements, and money market funds fulfill this need.
how to earn high interest rates with commercial paper
commercial paper offers some of the highest rates of any short-term financial instrument. as of October 2025, one-year commercial paper rates range from 3.50 to 3.55%, with rates as high as 5.0% per annum for accumulators.
only large securities firms with equity capital of KRW 4 trillion or more can issue commercial paper. currently, only four companies are eligible: Korea Investment & Securities, KB Securities, Mirae Asset Securities, and NH Investment & Securities. korea Investment & Securities leads the way with 16.5 trillion won, accounting for 40% of the market share, followed by KB Securities with 9.4 trillion won, Mirae Asset Securities with 7.9 trillion won, and NH Investment & Securities with 6.6 trillion won.
the biggest attraction of commercial paper is the higher interest rate compared to bank deposits. unlike deposits, you can get high interest rates without any preferential conditions.
it is important to note that commercial paper is not covered by the Depositor Protection Act. If a securities company fails, there is a risk of losing your principal. Therefore, you should only choose products from large securities companies with a rating of AA or higher. Currently, all four issuing securities companies are rated AA or higher, so safety is high.
in 2025, five more issuers - Samsung Securities, Shinhan Investment & Securities, Kiwoom Securities, Merits Securities, and Hana Securities - have applied for issuance approval. If approved, the market size is expected to expand from KRW 70 trillion to KRW 132 trillion.
Secure short-term deposits with RP investments
repurchase agreements, or RPs, are synonymous with safe investments. since they are backed by government bonds or blue-chip corporate bonds, they offer high principal security and are highly liquid as you can receive interest even if you invest for just one day.
The RP market is worth 98.8 trillion won as of January 2025, growing 29% year-on-year, and is on track to surpass 100 trillion won soon. this shows that investors are looking for both safety and liquidity.
interest rates for RPs in KRW are in the range of 2.7 to 3.2%. this is lower than bills of exchange, but higher than bank deposits, and best of all, it can be accessed at any time. rPs have no minimum investment period, so you can leave them for as little as one day, while committed RPs can be invested for periods ranging from one day to one year.
The key to RPs is collateral. you can use government bonds, specialty bonds, and investment-grade corporate bonds as collateral, and the collateralization ratio must be at least 105% of principal and interest. Only bonds rated BBB- or higher for general RPs and A- or higher for CMAs can be used as collateral, making them highly secure.
foreign currency RPs are also noteworthy. dollar-denominated foreign currency RPs can be traded 24/7, and you can expect to earn additional returns from currency fluctuations. however, there is a 50% penalty rate for early withdrawals, so you should set your investment horizon carefully.
Differences between MMFs and MMF ETFs
money market funds make up the largest market for short-term financial instruments at KRW 233 trillion. they offer interest rates ranging from 1-3% per annum and have recently evolved into a new form called MMF ETFs.
traditional MMFs are funds that invest in short-term financial instruments such as CDs and CPs. they have a one-year yield of 3.4 to 3.7%. they accrue interest daily and have little risk of principal loss, making them ideal for emergency fund investments.
mMF ETFs are the hottest topic in 2025. KODEX Money Market Active, TIGER Money Market Active, etc. are representative, and the overall MMF ETF market size has exceeded KRW 10 trillion.
KODEX Money Market Active is managed by Samsung Asset Management and is the largest at 5.86 trillion won. it is highly liquid with next-day settlement and is popular among institutional investors. TIGER Money Market Active is managed by Mirae Asset Management and is valued at KRW 2.07 trillion, and it broke the KRW 1 trillion mark within two months of its launch.
The advantages of MMF ETFs are low fees, real-time trading like stocks, and stable returns by investing in bonds with maturities within three months. the yield is over 3%, which is higher than CD rate ETFs and KOFR ETFs.
it's important to note that both MMFs and MMF ETFs do not have depositor protection. however, they are very low-risk because they are diversified across ultra-short-term, high-quality bonds.
recommendations by investor personality
the most important aspect of short-term money management is to understand your investment objectives and personality.
if you're looking for high interest rates as your top priority, then bills of exchange are the way to go. they offer 3.50 to 3.55% for a one-year term and up to 5.0% for an accumulator. if you can tie up your money for a year and are willing to risk losing your principal, you can expect the highest returns. however, be sure to choose a product from a large brokerage firm with an AA rating or higher.
if safety is your top priority, RPs are your best bet. backed by government bonds, your principal is highly guaranteed and you can earn interest even if you only invest for one day. interest rates are moderate, ranging from 2.7 to 3.2%, but they're safer than bills of exchange because they're backed by collateral. they're ideal for investors who want to keep their money for emergencies but still earn interest.
if liquidity is your top priority, you may want to consider a rolling RP or MMF ETF. rPs can be redeemed at any time, and interest rates range from 2.7 to 3.2%. MMF ETFs can be bought and sold in real-time, just like stocks, and have interest rates of 3% or more. KODEX Money Market Active in particular offers fast cashing with next-day settlement.
diversification is also a good strategy. for example, 50% of your free funds should be in bills to secure high interest rates, 30% in RPs for safety, and 20% in MMF ETFs to maintain liquidity. This way, you can balance interest rates, safety, and liquidity.
frequently asked questions
Q1. Which is safer, a bill or an RP?
RPs are safer. RPs are collateralized by government bonds or blue-chip corporate bonds, so even if the securities firm defaults, the principal can be recovered from the collateral. bills of exchange, on the other hand, do not have depositor protection and rely on the credit of the issuer. however, the risk of default is extremely low, even for AA-rated or higher securities.
Q2. What is the difference between MMF ETFs and regular MMFs?
the main difference is how they trade and how they are compensated. MMF ETFs can be bought and sold in real time, just like stocks. traditional MMFs take 1-2 days to redeem. yields tend to be slightly higher for MMF ETFs, and MMF ETFs are more favorable for small investors.
Q3. What are the tax implications of investing in short-term funds?
a 15.4% interest income tax is withheld from all Bills of Exchange, RPs, and MMFs. if your financial income exceeds KRW 20 million per year, you will be subject to comprehensive taxation. MMF ETFs are tax-free on capital gains, but are subject to a 15.4% tax on distributions. all three products are treated the same in terms of taxes.
Q4. Is now a good time to invest?
as of October 2025, interest rates are trending lower, but it is still worth investing. bills of exchange are higher than silver-handed deposits. the strategy of locking in the current rate with a one-year term product before rates fall further is valid. however, we expect further rate cuts in the next 6 months, so it is advisable to diversify your maturities.
Q5. Can I invest with small amounts?
yes, you can. most brokerages allow you to invest as little as $10,000. MMF ETFs are traded in 1-share increments and have a share price of around KRW 10,000, making them ideal for small investments. bills of exchange and RPs also have low minimum investment amounts, so anyone can get started. if you're a small investor, MMF ETFs are the way to go because of their low expenses.
the bottom line
short-term money management is no longer the domain of bank deposits alone. Bills of exchange offer high yields of 3-5%, repurchase agreements offer collateralized safety and the liquidity of overnight investments, and money market funds have become the optimal choice for emergency fund management with a market size of 233 trillion won.
even amid the trend of interest rate cuts in 2025, securities companies' short-term financial instruments have maintained higher interest rates than banks. The RP market surpassed 100 trillion won and MMF settlements have increased, showing that investor interest is translating into real money movement.
choose the best product depending on whether your investment objective is high yield, safety, or liquidity. you can maximize your returns with commercial paper, safely manage your money with RPs, or conveniently manage your emergency fund with MMF ETFs. it's also smart to get the best of all worlds with diversification.
now is the time to revisit your short-term money management strategy. If you found this article helpful in your investment decisions, please share your experience in the comments. subscribe to be the first to receive the latest financial information.