Hana Bank 100-Year Happiness Research Center "South Korea's 40s Decide to Become Stock Market Beginners"

Publication of Related Life Finance Report

[Asia Economy Reporter Kiho Sung] Hana Bank's 100-Year Happiness Research Center announced on the 16th that it has published the life finance report titled 'How People in Their 40s Live in Korea (Money Edition), Deciding to Become a Stock Market Beginner.'

People in their 40s are the central axis of our economy and households, and especially those in their early 40s face a critical deadline for building financial assets, making it a very important period for lifetime asset management. However, amid the rapidly changing asset management landscape due to COVID-19, interest in financial investment has also increased among this group. Accordingly, the research center examined changes in asset management perceptions among people in their 40s living in Seoul and four major metropolitan cities in the provinces.

Money moves through investment continue for people in their 40s. Among earners in their 40s, 78.2% are already financial investors holding stocks, bonds, funds, etc. Among them, more than half (57.4%) plan to increase their investment scale going forward. Even among non-investors, 61.0% think they will start investing if conditions such as 'lack of funds, time, and information' are resolved. The biggest reasons for expanding investments are the 'continued low interest rates' and the belief that 'it will be difficult to accumulate a large sum without investing.' Additionally, those in their early 40s cited 'price increases in housing (real estate), etc.' as a reason for expanding investments, while those in their late 40s mentioned 'household income is unlikely to increase much in the future.'

The expansion of investments among people in their 40s has been particularly noticeable in the past 1 to 2 years. Half (43.6%) of investors expanded their investments in the last 1 to 2 years. 15.0% started investing for the first time within the past year. 38.0% responded that their risk preference has changed recently, with more than twice as many becoming more aggressive (26.0%) than becoming more conservative (12.0%). The shift toward a more aggressive stance is largely due to the ongoing low interest rates and the recent stock market boom. One in four (24%) said their risk preference increased as they sought investment opportunities (timing). Especially, the impact of seeking investment opportunities was greater among higher income levels (9th to 10th deciles). Those with increased risk preference preferred direct investments, and among financial investment products, interest in ETFs was high.

Despite recent investment movements, the reality is that most investors have a low willingness to tolerate investment losses. Half of investors (54.5%) still want 'principal protection' or can tolerate losses of less than -5%. Only 15.8% are aggressive investors willing to accept losses of -10% or more. This indicates the need for management strategies tailored to conservative investors, including understanding the risks associated with expanding investment scale and solutions for managing them.

The 100-Year Happiness Research Center stated that, based on investment experience and risk preference, the largest group among the surveyed people in their 40s is stable investors (22%). These investors invest but do not want significant principal losses, so low-risk products with returns at the 'interest rate + α' level should be the focus for them. 'Financial beginners' who started investing within the past year account for 8%; they have high investment enthusiasm and are interested in future growth investment themes such as Korea-style big deals and the global 4th industrial revolution, but most limit their loss tolerance to less than -10%. They need to start with diversified investments using public offering funds or ETFs rather than individual stocks in these themes, and begin with installment investments that spread out the timing.

Wonju Lee, head of Hana Bank's Pension Trust Group, emphasized, "People in their 40s are in a period of lifelong wealth formation while also facing various life challenges such as children's education, housing preparation, and ongoing self-development, so careful investment management is necessary."

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