Teens score big gains as stock market rally sparks investing boom

A middle school in Seoul launched its first stock investment club last year, and many students posted hefty gains in a mock investment competition.

About 20 students at the public school formed teams of three to five members, selecting five stocks and managing a mock portfolio worth 10 million won ($7,300). The students did more than simply choosing which shares to buy and sell. They also prepared presentations explaining their choices and outlining their investment strategies.

Their mock investments ran for over a year, and the highest earnings posted among the teams was 83.7 percent. Another team showed earnings of 79.4 percent, and a third team had a return of 51.2 percent.

“I wanted students to understand that investment shouldn't be shunned in today's capitalist society,” said Lee Jung-min, a teacher who runs the club and who went by a pseudonym. “Students showed lots of interest and higher participation than expected. I was surprised that many teams recorded returns exceeding 50 percent.”

Teenagers are increasingly entering the stock market amid a market rally that has pushed the Kospi above 9,000. Their investment returns were also high.

Among Mirae Asset Securities' customers with account balances of more than 1 million won between January and May this year, teenagers posted the highest returns at 46.94 percent, according to the securities firm.

They were followed by investors in their 50s with returns of 41.5 percent, those aged 60 and older at 40.96 percent, investors in their 40s at 38.73 percent, children aged 0 to 9 at 38.1 percent, investors in their 20s at 33.69 percent and those in their 30s at 31.46 percent.

"Stocks owned by minors used to be considered as a means of parents transferring wealth to their children, but more teenagers are now analyzing corporate earnings and industry trends themselves and making investment decisions," said a source from the financial industry. "Having experience making investments is seen as financial education.”

The increase in securities accounts was also most pronounced among minors.

A total of 114,709 new accounts were opened for children aged 0 to 9 between January and May this year, up 44.6 percent from the end of last year, according to Mirae Asset Securities.

The number of new accounts opened for teenagers rose by 31.7 percent, or by 122,256 accounts, to 507,697 accounts during the same period.

Accounts opened for investors in their 20s increased by 19 percent during the period, followed by those in their 30s at 12.1 percent, those in their 40s at 11.4 percent, those in their 50s at 13 percent and those aged 60 and older at 9.7 percent.

Financial regulators have also shifted their stance. Rather than viewing stock investment by young people as something negative, policymakers are emphasizing the need to provide financial education at an early age.

The Financial Services Commission discussed offering more financial literacy education to middle school and elementary school students during a meeting on Tuesday. Currently, the commission teaches the importance of investments and how to make strategic financial decisions through online lectures for elementary students and via an experiential learning program that middle school students can choose to take at school.

The change marks a stark contrast with societal perceptions few years ago. In 2021, a securities firm allowed those aged 14 to 19 to open securities accounts online without having to visit branches. A legal review was launched by financial authorities, and the firm had to suspend the service just four days later.

Amid a rise in teenage investors, critics warn that the trend could widen wealth inequality as parents’ financial assets, knowledge and investment experience can be passed on to their children. They also point to the risk of losses from short-term investing in a market strongly affected by geopolitical risks and interest rate volatility.

Calls are also growing to make economics and financial education mandatory subjects in middle and high school curricula.

“Middle school students currently learn economics as part of social studies rather than as an independent subject, while in high school it is offered only as an elective, meaning economics and financial education remain insufficient,” said Seok Byoung-hoon, a professor of economics at Ewha Womans University. “It can be risky for students to gain investment experience by simply riding a stock market boom when adequate economic education has not been provided.”

BY KIM DA-YOUNG [[email protected]]