Youth Pivot to Stocks Over Savings Plan, Heightening Loss Concerns

The government is set to launch the 'Youth Future Savings Plan' in June, which aims to help young people build substantial savings of over 20 million won by depositing a fixed amount monthly for three years. This savings plan allows for monthly contributions of up to 500,000 won, is available to individuals aged 19 to 34 who meet income criteria, and includes government subsidies and an exemption from interest income tax.

The Youth Future Savings Plan offers a potential total return close to 17% annually over its three-year deposit period, making it a viable option for young people seeking stable asset growth rather than aggressive investment.

However, due to the recent record highs in the stock market, many young people are cashing out their savings and time deposits to invest in stocks, leading to concerns about principal losses. The asset-building trend among youth has shifted significantly. While preference for savings and time deposits was 54% two to three years ago, it has now dropped to 20.9%, while preference for domestic and international stocks has surged from 31.2% to 65.3%. A total of 43.7% of respondents indicated they would increase their stock investment by liquidating savings or using loans.

Cases have emerged where individuals with insufficient investment experience suffered losses or became credit defaulters after taking out loans for investment. Young people with limited initial capital tend to invest in high-risk stocks or products due to impatience. The current trend of young people flocking to the stock market, driven by a combination of inexperience and haste, has a high potential to lead to substantial losses. It is generally more beneficial in the long run for young professionals to steadily grow their initial capital rather than hastily investing in high-risk assets.

Discussions on these youth asset-building trends and financial market volatility are anticipated at international economic forums.