Minor Accounts All 800%↑
Buying domestic and overseas growth stocks that are unlikely to fail, such as Samsung Electronics and Apple
Photo = Getty Image Bank
Individual investors net bought stocks worth over 2 trillion won on the 29th. As a whole this year, individuals net bought more than 60 trillion won and emerged as the mainstream in the stock market. In the wake of this stock craze, parents who open accounts under their children’s names and buy stocks are increasing rapidly. This is the effect of the shift in perception of stocks from’dangerous financial products’ to’long-term investment instruments for the future of children’. ‘Papa ants’ (daddy’s individual investor) who started financial education and early economic education through stocks are also rapidly increasing.
The Korea Economic Daily reported a 791% increase from 34,835 last year to 31,554 this year. It is the largest ever. The number of newly established underage accounts, which had declined by 17% last year from 41,742 in 2018, sharply increased with the largest stock boom in history.
The decisive moment was that parents who confirmed the power of stocks this year recognized stocks that were exclusively for adults as investment destinations in their lives. In the past, bank deposits and savings were used to provide seed money for children. This year, it is said that high-quality stocks are becoming the means. The major stocks purchased through minor accounts were Samsung Electronics, Naver, Kakao, Tesla, and Apple, and other growth stocks that were unlikely to fail.
In addition to investment purposes, parents who started early education, saying that they would open their eyes to finance and economy early, also affected the surge in accounts. Deuk-Hyun Pyun, Vice President of Asset Management Strategy Department at NH Investment & Securities, explained, “The more parents are investing in stock, the more likely they are to open an account for their children.”
Experts believe that the reasons for opening stock accounts of minors such as investment, education, and gift for the future are diverse, but this trend will continue to spread.
“Why don’t I have stock?” A word from my daughter… ‘Papa ant’ bought by Kakao and Tesla
Choi Mo, 51, an executive at a large company, received a question from a high school student’s daughter. While watching TV, my daughter suddenly asked, “Dad, why don’t I have stock?” There was a mixture of dissatisfaction with her daughter’s words that her friends were talking about stocks, but she couldn’t get involved in the conversation. Choi was hot. I was worried that my daughter would not be left behind because she had not properly educated. Lately, he joined the ranks of ‘father buying stocks’. In addition to financial education, a portion of the allowance is taken out and given as stock every month. Afterwards, Choi was proud that she saw her daughter studying stocks and economics through newspapers and YouTube.
Kim Mo, 32, a beginner dad working as a health trainer in Nowon-gu, Seoul, opened a stock account last month to commemorate his son’s 100 days. Until his son enters college, he plans to buy shares of Samsung Electronics and Apple every month. The goal is to raise the child’s college tuition and independent funds.
Grandma’s stock instead of pocket money
Stock accounts in the name of minors are increasing rapidly. Hundreds of thousands of accounts were opened this year alone. Not long ago, the’minor stock account’ caused unpleasant feelings. There was a strong perception as a’wealth inheritance means’ that avoids taxes. But this year has changed. People who set up children’s stock accounts around the world, and those who give their salary pocket money as stock, became common. Stock futures and stock pocket money are becoming a culture.
Aunt, a 32-year-old office worker, purchased shares of Samsung Electronics in front of her 23-month son with 10 million won, which was raised through extra funds and a first birthday party. To date, the yield has reached 40%. He said, “I am buying 200,000 won worth of Samsung Electronics stock every month in the name of a child.” Grandfather and grandmother also added. Han Mo, 61, who lives in Songpa-gu, Seoul, recently opened a new stock account and put in 3 million won as a Christmas gift for her two-year-old grandson. Mr. Han said, “I deeply sympathized with the words of John Lee, CEO of Meritz Asset Management, that we should reduce private education expenses and invest in stocks. In the future, we will give stocks instead of pocket money.”
Papa Ant selected by Samsung Electronics and Tesla
In 2020, stock futures have become a new investment culture. It is a new trend created by’papa ants’ thinking that financial education as well as financial technology can be done. This is due to the decline in the recognition of’stocks as risky assets’ in the booming stock market.
In fact, they bought high-quality stocks that could bring higher returns than deposits. Samsung Electronics has always been listed as the number one stock that it wants to pass on to its children. According to Yuanta Securities, Samsung Electronics was ranked as the most stocked stock in minor accounts from 2018 to this year.
Except for Samsung Electronics, the top stocks are changing. Those who mainly invested in SK Hynix Celltrion KEPCO with their children’s accounts, intensively bought Naver Kakao and Hyundai Motors this year.
The tendency to invest in overseas stocks is also changing. As a result of analyzing customers who newly created underage accounts through Shinhan Investment, Tesla was the largest stock held. Apple, Alphabet (Google), Amazon, and Bugshire Hathaway followed. Until last year, China’s non-life insurance and Vietnam’s No. 1 non-life insurance company Bao Vietnam were among the top five.
Aiming to save money
Another evidence that minor stock accounts are an educational and long-term financial means rather than inheritance is the average balance per account. The number of new accounts this year surged nearly 800%, but the average balance per account is similar to that of last year. In the case of Securities A, where the number of accounts for minors has soared by 1,000% in a year, the average balance has decreased by 30%. A company official explained, “There are many people who have created accounts for long-term investments for their children, so the amount is not large, and even this is invested carefully.”
Some parents opened an account under their child’s name for gifting. Earlier this year, Mr. Park, 38, a medical industry worker who made high profits from Seegene, opened a stock account under the name of his five-year-old daughter as soon as he heard that he could benefit from the gift tax deduction through stock investment. If a gift is given to a minor child under the age of 19, the gift tax is exempted for a limit of 20 million won for 10 years. For example, if you buy 20 million won worth of stock at one year old and then buy another 20 million won worth of stock at age 11, 10 years later, you do not have to pay a gift tax of 40 million won. It was found that some parents are using wrap accounts that can flexibly manage and cope with various assets such as the US Stock Exchange Fund (ETF) and funds as well as domestic stocks. It is analyzed that the surge in the balance of branch-type (PB-type) wraps sold by domestic securities companies this year also had such an effect as the fund market was shrinking.
Jaewon Park / Reporter Hankyung [email protected]