The Sooner You Start, the Better... "Millennials & Gen Z Should Gradually Move Stock Profits 'Here'" [Retirement Pension Investment Strategy] ⑧

Sehyun Park, Head of Shinhan Premier Pension Business Division at Shinhan Investment Corp.

"Start Early"—Emphasizes the 'Core-Satellite' Investment Strategy

"While Millennials & Gen Z may not be able to buy real estate right away, they can start building retirement savings now. It is important to gradually increase the size of your retirement pension by transferring a portion of your stock market earnings into your retirement plan."

Sehyun Park, Head of Shinhan Premier Pension Division at Shinhan Investment Corp., stated this in a recent interview with The Asia Business Daily. He explained, "Typically, people only start paying attention to retirement pensions in their 50s as they approach retirement, but in pension investment, time is your greatest asset. The younger generation should start early."

Sehyun Park, Head of Shinhan Premier Pension Division at Shinhan Investment Corp. Shinhan Investment Corp.

Park noted that over the past few years, the retirement pension market has shown clear growth, especially in the defined contribution (DC) and individual retirement pension (IRP) segments. He analyzed this as a rapid shift toward an era of individual investors. "Actual returns translate directly into retirement assets," he said, explaining, "Retirement plans are now being recognized not just as managed financial products, but as assets you grow on your own." As Millennials & Gen Z, who show strong interest in capital markets, become the market's core, perceptions about retirement pension investments are also changing, surpassing even the baby boomer and Generation X cohorts.

With bullish forecasts continuing in the stock market—what has been dubbed the 'Manspi' outlook—Park recommended the 'Core-Satellite' strategy as a retirement pension investment approach that investors should pay attention to. "The more volatile the market, the more you should avoid concentrating your long-term pension assets on specific themes. Instead, most assets should be invested in indices," he advised, suggesting that investors anchor their portfolios with S&P500, Nasdaq 100, KODEX 200 ETFs, global equity ETFs, and target date funds (TDFs). As for the satellite portion, he recommended high-growth sectors such as the artificial intelligence (AI) value chain, semiconductors, and robotics and aerospace.

Park especially emphasized, "The appeal of retirement pensions is that withdrawals are not allowed without specific reasons, and you also get tax benefits." He added, "You should gradually transfer your stock market gains into your retirement pension. The goal is to build a lump sum quickly, which is why aggressive management is recommended when you are young." He further stressed the importance of a strategy that accumulates assets without frequent selling and said, "While it's good to ride the momentum of an explosive market, asset allocation is crucial."

Specifically, he suggested that for those under 40, it is appropriate to maximize the 70% cap on risk assets, increasing allocations to growth-oriented ETFs and high-vintage TDFs to maximize long-term compounding effects. "The earlier you start, the more suitable an aggressive approach is," he emphasized. For those in their 50s, a transitional period, he recommended using TDFs as the core, while balancing with dividend growth ETFs or bond assets to manage volatility. "As retirement approaches, it's important to gradually reduce the growth allocation and shift to dividend-focused ETFs such as US Dividend Dow Jones ETFs to prepare for cash flow," he said. For those aged 60 and above, he advised focusing on stable income, such as monthly dividend ETFs and bond-type products, to ensure stable withdrawals.

Park also stated, "The essence of retirement pension returns depends on the participant's investment decisions," emphasizing that "a culture where participants regularly check the returns of their own pensions every month should take root." In addition, "(For securities firms), it is important to create a virtuous cycle that maximizes customer returns by providing expert consulting and easy-to-understand information so that participants can make good choices on their own," he said. He pointed out that the reason participants choose securities firms ultimately comes down to their ability to manage returns, highlighting the diversity of investment products, expectations of high returns, and consistent risk management as key strengths. As of the first quarter, the retirement pension reserves in the securities industry increased by 7%, while banks remained flat and insurance declined.

As of the end of the first quarter, Shinhan Investment Corp. ranked first among securities firms for DC principal non-guaranteed returns (27.17%) and for default options (Neutral Investment Type No. 2, 17.56%). In particular, for IRP accounts, the company offers services such as free operation and asset management fees without any conditions. Park added, "As Millennials & Gen Z become the center of the market, both the pension and capital markets will grow. The younger generation should make an effort to learn about and understand retirement pensions before focusing on real estate."

This content was produced with the assistance of AI translation services.