"Kids, This Is How You Trade Stocks"...The Investment Secret Behind a 13-Fold Difference in Returns for Investors in Their 70s

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\r\n[Financial News] Investors in their 70s and older are trading far more actively in the stock market than people in their 20s, while also posting overwhelmingly higher returns. Backed by ample capital, older investors are concentrating on large-cap stocks, while younger investors are rotating through a variety of names, including exchange-traded funds (ETFs), with smaller amounts of money. The contrast is stark.
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According to Shinhan Securities on the 20th, an analysis of the investment tendencies of its customers in their 20s and those in their 70s and older in the first quarter of this year showed that older investors were making aggressive trades with strong financial firepower amid the stock market rally.
The most striking gap was in trading frequency and profit size. Investors in their 70s and older traded much more often than those in their 20s on both the buy and sell sides. Specifically, the average number of buy orders per person among investors in their 70s and older came to 65.4, about 4.1 times higher than the 15.8 recorded for those in their 20s. The average number of sell orders per person was also 45.7 for the older group, roughly 3.7 times the 12.2 seen among younger investors.
The profit gap was just as wide as the trading gap. In the first quarter, the average profit per investor in their 70s and older stood at 18.733057 million won, more than 13 times the 1.42546 million won average for investors in their 20s.
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At the root of this profit gap is a difference in asset size. Looking at the average daily balance per person in the first quarter, investors in their 70s and older held 182.82 million won, while those in their 20s had only 13.18 million won, a gap of about 14 times.
Average trade sizes also differed sharply. Investors in their 70s and older moved 239.74 million won on average for buys and 258.48 million won for sells, while those in their 20s traded at levels of 35.78 million won for buys and 37.21 million won for sells.
However, the "trading turnover rate," which measures actual trading volume relative to assets held, was much higher among those in their 20s. Their first-quarter turnover rate per person was 27,672.8%, about twice the 13,625.5% recorded for investors in their 70s and older. This suggests that younger investors tend to repeat short-term trades with relatively small amounts of capital.
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Clear generational differences also appeared in stock selection. The top two profit-making KOSPI stocks for both age groups were Samsung Electronics and SK hynix, but portfolio concentration differed.
For investors in their 70s and older, the top three profit-making stocks — Samsung Electronics, SK hynix, and Doosan Enerbility — accounted for 57.1% of total profits. In addition, the top 10 profit-making stocks included large domestic individual names such as Hanwha Ocean and Samsung Heavy Industries, showing a clear preference for quality mid- to large-cap stocks.
By contrast, the top three stocks for investors in their 20s — Samsung Electronics, SK hynix, and Hyundai Motor Company — accounted for only 32.0%. Instead, they actively traded index-tracking ETFs such as TIGER US S&P 500, ranked fourth, and Samsung KODEX 200 ETF, ranked seventh, showing a tendency to diversify their portfolios.
In the case of loss-making stocks, Samsung Electronics and SK hynix ranked first and second for both age groups. Still, the share of those two stocks among loss-making names was also higher for investors in their 70s and older, at 17.4%, compared with 10.1% for those in their 20s, underscoring the older investors' tilt toward large-cap stocks.
An industry source said, "This data shows that investors in their 70s and older, backed by abundant assets, focus their investments on quality mid- to large-cap stocks while also trading frequently in smaller amounts relative to their holdings, reflecting a seasoned investment pattern."
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moon@fnnews.com Mun Young-jin Reporter