A recent report by KB Financial Group’s Management Research Institute has highlighted the wealth distribution in South Korea, revealing that as of the end of 2023, approximately 461,000 individuals held financial assets exceeding 1 billion won. This figure represents 0.9% of South Korea’s total population, marking a 1% increase from the previous year. However, this growth rate is the slowest since the institute began tracking the data in 2011.
Key Findings from the 2024 Korea Wealth Report
The 2024 Korea Wealth Report, based on interviews with 400 wealthy individuals conducted between July and September 2024, paints a detailed picture of the nation’s affluent population. The total financial assets held by these individuals amounted to 2,826 trillion won, a 2.9% increase from the previous year. The main contributor to this growth was the 18.7% rise in the KOSPI index in 2023, which significantly boosted the assets of the wealthy.
Breakdown of Wealth Composition
The report also outlines the asset composition of the affluent:
- Residential properties: 32.0%
- Liquid financial assets (e.g., cash): 11.6%
- Non-residential properties: 10.9%
- Buildings and commercial properties: 10.3%
- Deposits and savings: 8.7%
- Stocks: 7.4%
Compared to the previous year, the proportion of stocks and non-residential properties rose, benefiting from rising stock prices and real estate purchases at lower prices. However, the share of real estate decreased slightly from 56.2% to 55.4%, attributed to a downturn in property values following the hike in interest rates.
Performance of Investments
Regarding investment returns, 32.2% of respondents reported a profit in the past year, a substantial increase from 20.3% in 2023. Conversely, the percentage of those reporting losses dropped from 16.3% to 8.6%, reflecting the profit-taking actions following the KOSPI surge in early 2023.
Investment Preferences for 2024 and Beyond
When asked about their expectations for short-term investments within the next year, the following options were identified as the most promising:
- Stocks: 35.5%
- Gold and jewelry: 33.5%
- Residential properties: 32.5%
- Non-residential properties: 31.3%
- Buildings and commercial properties: 21.3%
For mid- to long-term investments over the next three to five years, residential properties (35.8%) and stocks (35.5%) were seen as the most promising investment vehicles.
Sources of Wealth Accumulation
The report also sheds light on how these individuals accumulated their wealth. The main sources were:
- Business income: 32.8%
- Real estate investment: 26.3%
The average seed money for wealth accumulation was 740 million won, with individuals reaching this amount at an average age of 42.
Inheritance and Gift Trends
A significant proportion of the wealthy (60.8%) had inherited or received gifts, including:
- Cash and deposits: 53.9%
- Residential real estate: 44.0%
- Non-residential real estate: 35.4%
Additionally, 24.5% of individuals had already transferred assets, such as cash and residential real estate, to their children or spouses.
Overseas Investments
A notable trend among the wealthy is their investment in overseas assets. 75.5% of respondents have been investing in foreign assets for more than three years. Their preferred overseas investment products include:
- Foreign stocks: 47.5%
- Foreign currency deposits, insurance, and funds: 37.3%
- Foreign bonds: 12.3%
This shift towards global diversification reflects a growing trend among South Korea’s affluent population to seek opportunities outside the domestic market.
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