Micro-mini investors can buy 0.001 of a Tesla share
For the price of a coffee, you can become an investor. No need to meet any minimums or buy in round lots of listed shares.
In some cases, 100 won (8.8 cents) is enough.
Last year, the number of individual investors in Korea rose 48.5 percent to 9.2 million. The total in their 20s rose to 1.07 million from 380,000, in their 30s to 1.81 million from 1.07 million and in their teens to 274,000 from 90,000.
Many of these people were driven to the market by the low interest rates and the fear of missing out that has gripped the nation. Some may have started to make investments out of boredom as they have been prevented by the authorities from freely gathering with friends and family.
For those who don’t have the gumption or the ready cash to open a full brokerage account, the financial services companies are here to help. They are creating products that allow individuals to become individual investors with little money and even less effort.
In March, Hana Bank rolled out the Change Fund, which allows people to deposit spare change receive at market in an investment fund. People download the app, deposit 1,000 won and add more in 100-won chunks.
The bank offers about a dozen funds for the investors, including an EV and battery fund, Kospi fund and a technology fund. No fees are charged.
“We anticipate that the Change Fund service will be a chance to offer precious experience to people who just started their investment,” said a spokesperson at Hana Bank. “We’re planning to come up with products and services that customers based on the fast-changing investment market.”
Fintech companies were actually the first movers in the micro-mini investment market.
Starting early last year, KakaoPay Securities lowered minimums to invest in funds to 1,000 won for all available fund products. This aims to allow all people, regardless of their investment experience or knowledge, to start investing and get the chance to see some profits from it.
“We actually wanted all people, regardless of their knowledge or experience in investment, to join in as investors,” said Jeong Ju-hee, a spokesperson for KakaoPay. “As all people can invest with very small sums of money, we aim for customers to continually invest for a long period.”
KakaoPay Securities also introduced a “coin collection” service last year, which allows customers to automatically invest the small change that they are left with after purchasing goods or making payments at shops or restaurants via KakaoPay. People can select where to invest in advance.
For example, if a customer purchases a product priced at 1,200 won at a convenience store and pays 2,000 won with KakaoPay, the remaining 800 won automatically goes into a fund they have selected in advance.
KakaoPay Securities has some 600,000 accounts in March last year but that number jumped more than five-fold to 3.2 million as of December.
“I always had the stereotype that fund investment is something that only people who have at least 100,000 won can do," said 24-year-old Lee Dong-jin, who has been actively investing in funds via Kakao’s coin collection service. “But it’s really helpful that the service allows me to not waste the small change of 100 won or 200 won and actually put those in funds.”
"I believe there are so many people who want this kind of service, but do not know about its existence," Lee added. "I've been suggesting this service to all my closest friends and acquaintances, and they are all happy to know about it."
Early last year, Samsung Securities teamed up with the Tickle money saving service app and released Tickle Coin Bank Service.
The service allows customers who are left with small change to save it in a Cash Management Account (CMA). This service encourages customers to save and invest in stocks as soon as the amount becomes larger enough to buy a share.
“The number of young individual investors is growing rapidly, and more than 70 percent of the service users are people in their 20s and 30s who have insufficient experience in stock investment,” said Kim Sang-soo, head of digital service team at Samsung Securities. “For those younger people who wish to start their investment with a small amount of money, we are currently planning to expand the service further.”
People are given with many options – not only Korean stocks – but also foreign stocks.
Korea Investment & Securities in August last year introduced the Ministock foreign stock trading-only mobile app. Orders are placed based on the amount of investment instead of the number of shares in 1,000-won chunks.
For instance, customers can buy only 1,000-won worth of Amazon, although it trades for about 3 million won. Once the purchase is made, the buyer has fractional ownership of a share based on the purchase amount.
Users of the app do not have to worry about currency exchange or any of the other hassles of cross-border stock investment.
Currently, 260 companies traded on U.S. exchanges are available on the app, including Amazon, Google, Apple and Tesla.
The service has become a surprising hit with retail investors, especially younger people. The number of users of the app exceeds 600,000, while the total transaction amount is now more than 500 billion won. Some 80 percent of the total users are people in their 20s and 30s.
“Young investors in their 20s and 30s and those who have small amount of seed money can enter the asset management market easily [with the service,]” said Jung Il-mun, CEO of Korea Investment & Securities. “The Ministock service will contribute to expanding the healthy investment culture in Korea.”
For transactions of less than 10,000 won, 10 per month are free.
BY CHEA SARAH [firstname.lastname@example.org]