Why South Korea is seeing a surge in infant investment accounts

South Korean parents are ramping up efforts to give their children a head start in building long-term wealth by opening investment accounts even before they learn to crawl out of their cribs.

Brokerage accounts of kids under the age of one have nearly tripled from a year ago to about 15,000 in June at Mirae Asset Securities, the country’s largest brokerage by market cap.

New accounts openings for those under 9 have soared nearly 60% to around 185,000, the brokerage said, excluding duplicate accounts.

That enthusiasm, triggered by Korea’s AI-powered market rally, has sparked a trend toward generational wealth-planning, though the volatility in the domestic stock market has prompted investors to look for value beyond the border as well.

Lee Hye-won, who works as a nurse, told CNBC that she and her spouse believed investing long term was a better choice than keeping money in savings or deposit accounts. 

“We felt that, when it comes to managing our children’s accounts, the length of time invested matters more than the investment amount, so we opened an account for our first child at age 4, and for our second child right after birth,” she said. The family invests about 300,000 won ($210) to 400,000 won per month in U.S. exchange-traded funds, mainly those tracking the S&P 500. 

Other parents are doing similar things.

“I wanted to give my child the gift of time and the power of compounding during those years — that’s why I opened the account right after her birth,” said Lee Jun-hyeok, an office worker.

“I’m also making small, regular investments in the Korean semiconductor sector and U.S. physical AI–related stocks, both of which I see as having high growth potential,” he said.

Jae-joon Woo, professor of economics at DePaul University, told CNBC that parents will continue to open investment accounts for their children even if markets become more volatile. The phenomenon is here to stay “as long as equity investing—whether in Korea or overseas markets—is viewed as a reliable way to build long-term wealth,” Woo said.

“This could represent a gradual but meaningful shift from the traditional preference for real estate, which has long been the dominant form of household wealth in Korea,” he added.

Households held around three-quarters of their wealth in physical assets, primarily real estate, and the rest in financial assets, according to a survey by Ministry of Data and Statistics.