The man has high interest in stock market and he is observing stock market.
/Photography by Eom Hye-rin
“Are you investing in stocks, too?” It is no exaggeration to say that 2020 is the year of the stock investment boom, and many people are interested in stock investment. Especially, the number of those in their 20s and 30s investing in stocks has increased. However, they are suffering a lot amid this stock boom, and we can easily understand the distress of young people through a couple of neologisms. Neologisms such as “Bit-tu,” meaning “to invest with debt” and “Yeong-kkul,” meaning “to invest with all one’s soul,” have blossomed, and the main group behind the current investment trend are those in their 20s and 30s. Why are so many young people investing so actively in stocks?
Generation 2030 is flocking to the stock market
According to a survey of 1,093 Toss (mobile finance service) users in their 20s and 30s conducted by Viva Republica, 47% of the respondents have already invested in stocks, 42% said they would invest in stocks in the future, and only 11% said they had no plans. Among Toss users who are currently investing in stocks, 70% of people have invested in stocks for less than one year, 20% for more than one year and less than three years, and 5% for more than three years. Only 5% of users have invested in stocks for more than five years.
Many people in their 20s have also opened overdraft accounts in banks. According to data from Financial Supervisory Service, as of the end of June 2020, 14,245 people in their 20s who used overdraft accounts at saving banks accounted for 57% of the total 24,997 users. Despite the high-interest rate of around 15% per year on average, those in their 20s who have difficulty opening overdraft accounts at commercial banks used overdraft accounts at saving banks for investing in stocks.
There are many reasons why people in their 20s and 30s are interested in stocks. In 2017, those in their 20s had already experienced an “investment craze” due to the boom of bitcoin which is a kind of virtual currency. Also, the threshold of entry into the stock market has significantly lowered compared to the past due to the growth of non-face-to-face services and the development of video tutorials available on places such as YouTube. The advantage of participation has inspired many people in their 20s regardless of the size of their assets.
Many people start investing in stocks to decrease their anxiety about the future. As economic conditions worsened because of COVID-19, the unemployment crisis became even more severe. New employments by companies have declined significantly, and even occasionally, employment was postponed or canceled even though the employment had already been confirmed. Accordingly, young people who felt anxious about the future have started investing in stocks to cope with the economically unstable future. They chose stock investment instead of low bank interest, which cannot be expected to make considerable profits. Lee, a junior of Dongguk University, said, “Generation 2030 has a strong sense of values that they can study and live a successful life only when they have enough money, making them feel frustrated and desperate about money, and I am too. It is a psychological environment in which they can easily fall into stock investment.”
According to a survey, conducted by the Dongguk Post, of young people in their 20s(379 answered), 69.7% of respondents said they are investing in stocks. Regarding the reason for investing in stocks, 37.5% of the respondents answered, “Because of the low interest rate, I judged that there was a limit to collecting funds with only bank deposits or installment savings.” In addition, 33.2% of the respondents chose, “Because I think that it is impossible to live an economically stable life in the future with only earned income.”
Some people experience “FOMO Syndrome,” which refers to a sense of fear of isolation. It indicates a serious fear that only oneself is missing or excluded from the flow of the world. “FOMO” means “Fear of Missing Out.” Some people feel symptoms of anxiety about being alienated or missing out amid the stock investment boom. There is even a newly coined word, “Byeo-rak-geo-ji,” which means that one becomes relatively poor as he or she is unable to participate in soaring real estate or stocks. They often start stocks with anxiety and nervousness that they are alienated since they cannot keep up with the trend of the world unlike other people who make money through stocks.
Yoon Sun-joong, a professor of the Department of Business Administration, said, “I think there are two reasons why young people start investing in stocks. Historically, individual investors tend to flock to the stock market after the stock price rises a lot. The stock market has been quite bullish since the outbreak of COVID-19, so the demand for stock investment seems to have increased a lot. The second reason is that with many people investing in stocks recently, rapidly of young people seem to have started stocks because they felt that they were relatively behind if they do nothing.”
Problems arise from young people investing in stocks
Professor Yoon said, “Many university students or young people who have recently started investing in stocks do not study enough, and they invest in stocks just by following people around them. In a special situation like last year, most of the stocks rose, so even young people who did not study much about stocks had no problem. However, it will not continue to do so, and there will be cases where they will lose money in the future. I am very worried about that.” Therefore, young people are entering the stock market with insufficient financial knowledge.
The debt of people in their 20s and 30s is increasing due to excessive investing. As mentioned earlier, young people in their 20s and 30s are investing in stocks excessively by getting a loan or borrowing money to invest. This is the way young people choose reluctantly to secure funds because they did not have time to raise assets to invest in stocks. As a result, the debt of young people is increasing significantly. According to the Financial Stability Report released by the Bank of Korea in December last year, as of the end of the third quarter of 2020, the household loans of young people increased 8.5% from the same period last year. Some people in their 20s, who are in debt, are eventually unable to pay their debts and request relief. According to the Supreme Court of Korea’s individual rehabilitation data by age, as of June 2020, the number of applications for individual rehabilitation for men in their 20s increased 29.8%, and women in their 20s increased 24.7% compared to the end of last year. Among all age groups, the only group in both men and women who increased by more than 20% was in their 20s.
Young people are also suffering psychological damage from stocks. They keep watching the stock market because they feel nervous and anxious about when to sell. Therefore, they cannot concentrate on their work, and they feel lethargic and depressed. According to a survey conducted by the Dongguk Post, some people said, “I stay curious about stocks and continuously check them, and I get stressed,” “I cannot concentrate on my studies,” “I often missed what I have to do on time because I have to keep checking stocks on my cell phone,” and “When I look at my friends who have just started investing in stocks, they are anxious about the changing stock prices day by day.”
According to a survey of 639 people conducted by Incruit and Albacall, job information websites, respondents answered that they check the stock market an average of 5.89 times a day. In addition, 49.9% of respondents of office workers answered that they check the status of stocks while working. People in generation 2030 suffer not only from economic distress but also from psychological distress and disruption of their work.
Professor Yoon left a message to the students who started investing in stocks. He said, “Basically, risk assets such as a stock needs to be invested in the long term. Therefore, it is impossible to invest rationally if you get a loan or invest excessively beyond the level you can afford. You need to have a mindset of investing a certain portion of your assets for a long time, and to do so, I recommend you to analyze and understand the stock market or companies you want to invest in and then start investing in stocks.”
Eom Hye-rin firstname.lastname@example.org
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