Lee Ji-won (20) is leaving for university carrying the book Korean Twentysomethings, Let's Get Crazy about Financial Investment. She picks up a free newspaper, takes the subway, and reads articles and advertisements about financial investment. She steps off the subway and walks to university. Many books about financial investment are placed in the best seller corner of bookshops, and university notice boards are covered with advertisements for simulated investment and investment groups and other things related to financial investment.

A few years ago, we began hearing the phrase “financial investment”all around us. Today, we watch TV programs related to financial investment such as Let’s Play with Economics and Economics Vitamin. These programs are “infotainment”: they give us both enjoyment and information, and both programs are popular successes. Financial books are also big hits on the market. In the early 2000s, Koreans thought that financial investment came with high risk. Everyone wanted to make a fortune at one stroke. At that time, especially in 2003, the lottery was very popular. After the early 2000s, land speculation became more popular because of the speedy rise of housing prices.

In 2007, the government made efforts to curb housing prices, so financial goods began to attract attention. According to the Samsung Economic Research Institute (SERI), two financial service products, Chinese funds and Cash Mangement Accounts (CMA) ranked in the top 5 of the most popular items of 2007.

Nowadays, university students also have great interest in financial investment. Classes about financial investment are some of the most popular classes amongst university students. The establishment of classes and groups for analyzing companies and stocks increased quickly. Recently, students have invested in stocks to learn about financial investment, but now students aim for higher returns. Kim Jong-hyeok (soph., Dept. of Law) said, “I earned 2.5 million won though part time work before military service. After military service, I invested in stocks and received a profit of 4 million won.”

Some university students, however, go too far. They invest their tuition fees in stocks, and some of them lose their money. Some financial specialists warn young investors that investing without plans or knowledge is very dangerous.

Why do university students care about financial investment even though they do not have regular incomes? Students who are not sure if they will get a good job after graduation care about investing. The job market is getting bad, so students need other ways to earn money. Money has become a serious problem for university students these days. They think that financial investment is essential. Some students invest in financial products to make money for their studies. The government and schools encouraged savings, but now people realize that simply saving is not enough to become rich. A large decline in bank deposits shows that people are turning to other financial services. Kim Su-jin from Kyung-pook National University said, “I want to go to Australia to study English. I will make my own money for expenses, so I have invested in some financial services.”

Student investment earning rates fluctuate enormously. Investments are very risky, so students can lose a lot of money. However, some students get high returns on their investments. Lee Jae-ho, a financial consultant with Mirae Asset Securities, said, “No one
can beat the market. People think that anybody who studies stocks and makes an effort can get high returns, but personal investment in stocks really comes down to luck.”

Definitely, it is not easy to become financially secure, but some people are already financially secure. Some university students invest hundreds of million of won. The Gazette suggests some tips to help you make money.
Understand the Time Value of Money
Knowing the time value of money is essential for investing. If you do nothing to increase
your asset, there is no risk; however, the value of your asset will decline because of inflation. Another thing that we should consider is the opportunity cost. If you invest in
financial products, you earn profits. University students have lots of time. It is the main
advantage of young investors. We have enough time, so we can invest long-term. There are several advantages to this. Long-term investments reduce risk and earn a good rate
of return. Compound interest products are the best examples of long-term investment. You
might have heard of the magic of compound interest. It is close related to time, and it will increase your money geometrically. Here is a tip about compound interest. If you divide 72
by the compound interest rate, you get the period to double your principle. For example, if
the compound interest rate is 10%, it will take 7.2 years to double your principle.

Maintaining a Profit Margin
Warren Buffett, a world famous investor and CEO, has two investment principles. The
first principle is “Do not lose the principle,” and the second is “Always remember the first
principle.” He doesn’t mean to keep the principle; he means that minimizing losses. In fact,
it’s possible to earn a profit margin with luck, but it’s impossible to maintain that high profit margin.

Every investment comes with risk, so we cannot earn profits all the time. How to continue to earn a profit margin is more important than how to get large returns. There are various ways to keep your financial capital, and one of them is through diversified
investments.

Useful Advice from a Financial Specialist

Nowadays, many more students come to me for advice about investment than before. A survey found that it is a trend amongst today’s university students to have one domestic fund and one offshore fund. In the case of offshore funds, Chinese funds (China and Hong Kong) and BRIC (Brazil, Russia, India, and China) funds are the most popular. A few years ago, people thought that only the rich invest in funds; however, nowadays we can get information about financial investment easily through broadcasts and newspapers. Therefore, people's mind has changed to become more open towards financial investment. The most stable and best way to invest is to have diversified investment with a small amount of money. Many university students invest in diversified funds with 50,000 or 100,000 a month. This sum is not too expensive. Therefore, they aren’t heavily burdened and need not be sensitive to business fluctuations. Just do your fund constantly. Actually, there are many students who don’t have a great deal of knowledge about financial investment. The most important thing for students who want successful stock investments is to learn and understand international markets. For example, if you have a BRIC fund, it is important to read economics newspapers and check each country’s economic conditions. In conclusion, I want to give this advice to students as a counselor: invest in uncommon financial investments, for example, natural resources funds, water funds, and global warming funds. Invest in funds that are suitable for each individual. It will be a good experience for you. Go for it! By Lee Tae-hoon Financial Consultant of Daegu Bank

Trust the Financial Specialist
There is no doubt that Warren Buffett is one of the best investors. I think the wisestinvestors are people who invest with Warren Buffett because they earn high investment earning rates while working their own job. These days, many investors entrust their money to financial
specialists, but some people who invest in stocks by themselves don’t trust other people including financial specialist. In fact, direct investment in stocks or bonds can earn higher earning rates than indirect investment through intermediaries; however, we need to remember the phrase “High returns come with high risk.” The other problem of direct investment is time. University students have a lot of time, but they should prepare for employment. Many financial specialists say that spending too much time checking your stocks can be unhealthy.


Earning a high salary is as important as financial investment to become rich. If the company that you want to enter thinks that English ability is important, you should invest in your English ability even if tuition fees are over a million won. Invest in your health. Hobbies and good relationships are also important. Reduce wasting money, but that doesn’t mean you have to be tightfisted. Remember Warren Buffett. He is not only a good investor, but also a generous donor. The most important thing is having a right mind about investment. Financial
investment is not a technique; it is a habit. In my case, I’m a smoker. If I give up smoking
and invest in financial products that are compounded at a yearly rate of 8%, I will have 110 million won in 30 years.

We can get a lot of financial investment advice from books, newspapers, and the Internet; however, only a few people earn lots of money through those ways. We need to continue to do our best to get investment earnings. Investment is not gambling, so we need to make an investment plan and think about the future. I’m sure that if we don’t give up the dream of becoming rich, we will become rich eventually.

By Kim Hyun-geun
KMG Editor
foreverhg@kmu.ac.kr
By Kim Hye-bin
KMG Reporter
hyebin1111@kmu.ac.kr

Q &A with Finance Professor Kim Sung-sook

Q. What do you think about university students’ investment? A. Some people worry about student investment, but they don't need to have a negative view. Among the respected investors, many of them started investing while teenagers. In today's economy, financial capital is more important and powerful. Therefore, we should promote student investment because they will be the economic leaders of the future. However, it's possible that investing could spoil their normal life. Thus, university students have to invest amounts that are well matched to their position. Q. What should we know for successful financial investment? A. Before investing, you need to analyze your whole fortune and cash flow. You have to judge if you have debt, if your expenditure is more than your income, and if you have enough money to invest. Making enough money to invest is very hard for university students because they don't have regular incomes. Therefore, before investing, practice with simulated investment software and gain knowledge by reading useful financial books. That will makes it easier to invest. Q. What should we be careful about? A. You should be careful about high-risk investments. If you dream of making a fortune at one stroke, stop. Global investors also experience trial and error. Therefore, having a dream of making a fortune at one stroke is your greatest enemy. Q. Would you give some advice to students who want to invest? A. Financial investment is not only about financial products or real estate, but also about managing your finances. Therefore, knowing how to manage your finances to maintain your stable life and how to secure funds for your future life is very important. Before investing, ask yourself “What do I need money for?” and “How much do I need?” Think about how to use your money before investing is helpful. By Kim Sung-sook Prof., Department of Consumer Information Science kssch@kmu.ac.kr