Retirees who plan to fund living expenses through stock investments need thorough risk management and prior verification, an expert advised.
Cha Young-joo, head of the Wise Economic Research Institute, appeared Monday on the YouTube channel "Nurungji," which has 50,000 subscribers, and said, "Fewer than 10% of investors have consistently generated profits through stock investing for more than three years."
Those entering the stock market ahead of retirement need a different approach than during their working years. While employed, investors have earned income that allows them to recover a portion of investment losses. But after retirement, with fixed income reduced or eliminated, they must fund living expenses with investment returns, so the same losses can become a greater burden.
Cha pointed out that investors aged 60 and older, in particular, may have to sell their holdings regardless of market conditions if they face health problems or sudden cash needs. "Stocks do not rise forever," he said. "The real risk facing retirement investors is that when they cannot control market conditions, the opportunity to recoup losses disappears."
Long-term investment in blue-chip stocks is not always a safe choice either. Past cases show that recovering the principal in certain stocks took more than five years. For retirees who need living expenses, a strategy that ties up funds for a long period may not be realistic.
Accordingly, Cha advised, "Before actual investing, you should go through mock trading and verify whether you generate profits over six months to a year. If you cannot adhere to stop-loss principles, you should approach stock investing with retirement funds cautiously."
He also urged caution regarding how investors obtain investment information. "Getting information through YouTube is not studying but information consumption," Cha stressed. He added, "You should clearly establish four areas — fundamental analysis (financial statements), technical analysis (charts), account management, and psychological management — and learn through materials from credible institutions such as the Bank of Korea or the Financial Supervisory Service."
He explained that post-retirement investing should prioritize the stable management of retirement assets over returns.
"Managing within 10% of total assets as a pastime or for mental exercise is possible, but going into stocks to grow your severance pay is risky enough to put your life on the line," Cha said. He emphasized that the precondition for post-retirement investing is to first examine one's own fund management ability and loss-response principles, rather than following others' profit cases.
