[In-Depth Look] Wise Investment Life

Hwang Se-woon, Research Fellow at the Korea Capital Market Institute

With advances in medical science, people's lives now begin and end in hospitals. For pregnancy and childbirth, we visit Seokhyeong-ssam (Obstetrics and Gynecology), and after the child is born, we seek out Jeongwon-ssam (Pediatrics) with a bright smile. As work experience accumulates, occasions to meet Ikjun-ssam (Hepatobiliary and Pancreatic Surgery) due to company dinners and heavy drinking increase. We must also muster the courage to see Junwan-ssam (Thoracic Surgery), who may seem prickly due to accumulating cholesterol. As we age further, the help of Songhwa-ssam (Neurosurgery), who understands even the patient's brain, becomes crucial. From cradle to grave, hospitals have been deeply involved in important moments of life.

With rising economic levels, the demand cycle for financial services is also expanding. When a child attends kindergarten, an account is opened at a financial company, and around middle school entrance, they experience a children's bankbook that marks a farewell to parental care. Upon employment, loans are taken out for home purchases, becoming a loyal bank customer until retirement, and by subscribing to pension products to prepare for post-retirement, a 'three-legged race' relationship with financial companies is solidified. At this point, the strength of the relationship built with financial companies can determine quality of life. Finance has been deeply involved in life whenever a large sum of money is needed.

The era of living to 100 years old is already a reality. Although retirement age has not changed significantly, the time after retirement has rapidly increased. There is widespread social anxiety about unprepared retirement. Since children cannot be relied upon for their parents' future, the role of finance is growing. However, the reality is not easy. In the zero interest rate era, the role of traditional financial products is rapidly fading. Bank deposits and savings accounts rarely offer even 1% interest. Whether we like it or not, shifting from saving to investing has become an inevitable choice.

Nevertheless, the actual investment world feels unfamiliar and perilous. Financial incidents occur frequently. Large-scale redemption suspensions of some private equity funds have caused investor losses. Stories of losing most of the principal in complicated derivative-linked securities (DLS), and news of huge losses from 'blind' thematic stock investments make the investment world feel like a jungle. Yet, not investing brings anxiety about falling behind others.

It is said that when someone is sick at home, family members become half medical experts. However, no one has said that when money is needed or must be managed, family members become half financial experts. While it is true that finance is complex and its jargon hard to understand, medicine is no less complicated. Even if one does not have the passion to study medical terms like an alien language overnight to restore family health, it is only right to consider principles or directions for investing the money one has saved.

What is needed for wise investing is neither grand nor complicated. Simply giving up illusions of a 'big jackpot' and steadily increasing investment amounts little by little can yield results beyond expectations. Many investors approach investing with fantasies of hitting a home run. However, the moment you tense up trying to hit a home run, the chance of striking out increases. Investment generally looks like steady singles with occasional home runs. Just as serious illnesses are rarely cured miraculously in one shot. Steady investment may seem trivial but is important. Predicting market changes is nearly impossible. Appropriate response is more important than precise prediction. The approach of laying one investment brick a day will prove its worth over a long period. This is the era of living to 100. We must have the wisdom to wisely utilize both medicine and investing.