Parents in South Korea are increasingly opening brokerage accounts for their children, with accounts for those under one year old nearly tripling to about 15,000 at Mirae Asset Securities as of June. The surge in new accounts for children under nine has risen by nearly 60% to around 185,000.
This trend is largely fueled by the recent AI-powered market rally and a growing recognition of the benefits of long-term investing over traditional savings methods. For instance, families are investing between 300,000 won ($210) and 400,000 won monthly in U.S. exchange-traded funds, particularly those tracking the S&P 500.
Economic experts, including Jae-joon Woo from DePaul University, suggest that this trend will persist even amid market volatility, as equity investing is increasingly seen as a reliable means of building wealth.
Additionally, the high capital gains tax on real estate in South Korea, which can reach up to 70% for properties held for less than two years, is prompting families to consider stock investments more seriously. Tax exemptions on gifts up to 20 million won from parents to minors further incentivize this shift.
Brokerages and the government are also facilitating this trend by simplifying account opening processes and offering incentives, such as Kakaopay Securities' plan to distribute stocks to newborns. Overall, this movement towards investing for children represents a significant cultural shift in wealth management in South Korea, moving away from the traditional emphasis on real estate