"All-In Investment Is the Only Answer" Why Are 20s and 30s Youth Engaging in 'Debt Investment'?

Young People Investing with Debt
Experts Say "Due to Uncertainty About the Future"

Recently, 'Bittu' has been spreading among young people. 'Bittu' is an abbreviation of the phrase 'borrowing money to invest.'
Photo by Yonhap News

[Asia Economy reporters Han Seung-gon and Kim Seul-gi] # Kim, a late 20s office worker, recently started investing in stocks. Kim said, "Not only my friends but also senior colleagues at work have recently started investing in stocks," adding, "In the past, stock investment was a financial strategy to make money with leftover funds, but now, investments by people in their 20s and 30s are desperate investments, such as for 'owning a home'." He continued, "Because of this, even people in their 20s talk about stocks when they meet." He also confessed, "Recently, I was in a negative situation, but I am trying to invest even if I have to borrow money. Stock investment feels like hope."

Amid the ongoing economic recession caused by the novel coronavirus disease (COVID-19), 'debt investment' is spreading among young people. 'Debt investment' is a shortened term for 'borrowing to invest,' meaning borrowing money to buy stocks or invest in real estate, etc.

According to a survey, young people like Kim are jumping into debt investment. On the 12th, a joint survey by the job portal Incruit and the non-face-to-face part-time job recruitment platform AlbaCall on 'debt investment experience' found that among 753 respondents, 71.2% answered that they had experience with financial investment this year.

Among them, 17.9% answered that they had 'borrowed money to invest.' By status, the highest proportion was self-employed (26.3%), followed by full-time homemakers (18.8%), office workers (14.5%), and university students (9.4%). By age group, it was confirmed as 40s (30.4%), 30s (16.2%), and 20s (7.63%) in that order.

[Image source=Yonhap News]

Another survey confirmed that credit loans among young people in their 20s have increased sharply, and transactions involving borrowing money to buy stocks have also risen significantly.

According to data received on the 11th from the Financial Supervisory Service by Jang Hye-young, a member of the National Assembly's Planning and Finance Committee from the Justice Party, as of the end of June this year, 14,245 people in their 20s were using negative balance accounts at savings banks, accounting for 57% of the total (24,997 people).

The number of new users in their 20s increased by 4,978 in the first half of this year alone, showing a larger increase than other age groups. Considering that the number of new users for the entire last year was 6,313, the growth rate can be seen as nearly 50%.

Margin loans from securities companies, where money is borrowed to buy stocks, are also increasing sharply among people in their 20s. The balance of margin loans for people in their 20s was 379.8 billion KRW in August this year, an increase of 270.5 billion KRW (133.8%) compared to the end of last year (162.4 billion KRW). During the same period, the increase was 71.6% for people in their 30s and 70.5% for those in their 40s, making the increase among people in their 20s much larger.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is attending the National Assembly's Planning and Finance Committee's audit on the Ministry of Economy and Finance's tax policy on the 8th and providing answers.
[Photo by Yonhap News]

The government also expressed sympathy for the situation where young people are rushing into stock investment. On the 8th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at the Planning and Finance Committee's national audit, "(People in their 20s) investing in stocks or purchasing homes means that many are trying to climb the social ladder."

Deputy Prime Minister Hong said, "It seems to be because opportunities in the job market for people in their 20s are decreasing," adding, "The solution is to provide jobs to young people. I believe that jobs that can increase earned income come first."

Young people collectively lamented that they have no choice but to invest in stocks. Lee, a mid-30s office worker, said, "Buying a house through stock investment is actually more realistic," adding, "How can you buy a house by saving your salary? Prices are rising, everything is going up. Everything except salaries has increased."

Another late 20s office worker, Park, said, "I am part of a study group with acquaintances to learn about stock investment," emphasizing, "People in their 40s and 50s point out that young people's stock investments are risky, but from our perspective, this is safer." He continued, "We are continuously studying about investment returns," and added, "I hope people think about why young people have jumped into stocks even by borrowing money."

Experts analyzed that the cause of the 'debt investment' phenomenon among young people is related to an uncertain future due to employment difficulties.

Kim Tae-gi, a professor of economics at Dankook University, explained, "The difficulty in employment among young people has long been a structural problem, not a temporary one," adding, "Because they think the opportunity to get a job and earn money itself is blocked, the phenomenon of borrowing money to buy stocks or invest has emerged."

He further pointed out, "Young people would not borrow money to invest just because investing is good. This phenomenon seems to arise because reality is too frustrating."

This content was produced with the assistance of AI translation services.