Why South Korea is opening investment accounts from the cradle

Photo: Mikhail Nilov · Pexels

A curious phenomenon is growing in South Korea: families opening brokerage accounts in the name of their newborn children, with the idea of starting to invest from the first months of life. What used to be a minor practice has become a visible trend across the country.

A response to several social pressures

Several factors coexist behind this movement. South Korea has one of the lowest birth rates in the world, which means each birth now concentrates more family financial planning and attention than in the past. At the same time, there is a growing culture of early financial education, with parents seeing these accounts as a way to pass on wealth and, along the way, familiarize their children with investing from an early age.

These accounts typically operate under custodial arrangements, where an adult manages the funds until the minor reaches legal age. The time horizon is, by definition, extremely long, which sets them apart from most investment decisions adults make with shorter timeframes in mind.

The South Korean phenomenon also invites a broader reflection on how different cultures approach the relationship between family, savings and financial markets. This is not a recommendation nor a model to simply replicate: any decision of this kind depends on particular family circumstances, goals and risk tolerance, and deserves the same caution as any other long-term financial decision.