"Where do we start investing to prepare for old age?"

Mr. A, an office worker who was watching the recent stock market rise, became complicated. I felt like I was the only one missing an investment opportunity, but when I tried to enter the market, I hesitated. The stock price already seemed to have risen a lot, and I was worried that I might be bitten by the high point after investing now.

Even so, I didn't feel comfortable just collecting my salary without doing anything. House prices have been high and retirement has been prolonged, because I thought there was a limit to preparing for the future only with deposits and installment savings.

In fact, Mr. A's concerns are not special. Anyone interested in investing asks similar questions at least once. Is it okay to go in now, and if I wait a little longer, the price will go down. Everyone wants to buy at a low price and sell it at a high price. However, it is not easy for experts to accurately guess the highs and lows of the market.

For ordinary office workers, the most realistic investment weapon is the "time" to invest longer than the "prediction" to hit the market. Welfare is often called the magic of investment, but its power does not appear in the short term. The effect increases only when you stay in the market for a long time and repeat the process of reinvesting your profits.

The longer the investment period, the clearer the welfare effect. Assuming that 300,000 won per month is invested at an annual rate of 5% return, the valuation will be about 20.4 million won in five years, but it will increase to 123.31 million won in 20 years and 249.68 million won in 30 years. This is because not only the principal but also the profits accumulated so far will be re-earned.

What is more important than putting in a lot of money from the beginning is to create a structure that will not stop investing. So the first question to ask in long-term investment for old age is not 'what to buy'. We have to decide how to invest steadily first.

Another way is not to try to set the timing of investment at once.

First, I have to decide the amount of money that will be left for me in the future from my salary first. Retirement preparation does not start with what you do when you have money left, but with the habit of separating when you receive a salary. It is easy to maintain consistency by setting an amount that is not unreasonable for living in the range of 10% to 20% of monthly income and using automatic transfer. The important thing is not to set an unreasonable amount from the beginning, but to find a level that can continue even if income and expenditure change.

Second, it is better to divide investment funds according to their purpose. The core funds for retirement can first utilize accounts suitable for long-term management, such as personal retirement pension (IRP) and pension savings, and the portion of mid- to long-term funds that will be relatively flexible can be used as personal comprehensive asset management accounts (ISA). By distinguishing the purpose of the account, it is possible to reduce the impulsive use of old-age funds even when the market fluctuates.

Third, investment targets do not need to be overly complex. The important thing for office workers is to steadily participate in the market rather than the ability to continue discovering promising stocks. Index-oriented portfolios that distribute investment in domestic and foreign assets can create a basic framework for long-term investment. After all, it is more important to have a product that you can understand for a long time than to choose a good product once.

Fourth, investment principles must be set before the market falters. If the stock price surges, the impatience of falling behind increases, and if the stock price plunges, the anxiety to avoid losses increases. It is difficult to continue long-term investment if you change your plan whenever your emotions move. Regardless of market conditions, the simple principle of investing the same amount on the same day of every month can reduce the shaking of judgment.

Fifth, it is necessary to have a habit of checking accounts regularly rather than checking them every day. The market rises and falls several times a day, but there is no reason to evaluate the performance of retirement preparations on a daily basis.

After all, determining the size of old assets is more likely an investment habit that has been kept for a long time than a single bold choice.

[Kim Seohee, NH Nonghyup Bank WM expert]