High-income households in South Korea -- those who earn between 70 million won ($59,000) and 120 million won before tax annually -- saw their assets increase by 19 percent, or 150 million won on average, from last year, a study showed Sunday.
According to the study conducted by Woori Financial Research Institute, which is run by Woori Financial Group, its 4,000 clients classified as “mass affluent” saw their assets rise to 917 million won on average.
The size of debt on average also soared 24 percent, or 29.62 million won, to 148 million won, it added. The category of mass affluent refers to individuals who are in the 10 to 30 percent bracket of the top earners’ list.
Most of the assets held by the top earners were of real estate as opposed to stocks and bonds. The ratio of property assets among their total assets was 78 percent, while financial assets marked 15 percent.
“Rising housing prices seemed to be behind it,” the think tank said, adding that half saw their property assets gaining up to 200 million won in value.
Meanwhile, more high-income earners increased their investments in stocks.
The average valuation of stocks they held this year came in at 33 million won, a 48 percent jump from last year when it was 22 million won. The rise led to a decline in the opening of savings, pension and insurance accounts, according to the think tank.
“Stocks have become the primary tool for investment for the top earners holding financial assets. The pandemic has made them more aggressive,” the think tank said.
The high earners also made cryptocurrency investments, with one out of five of them having done so. On average, they spent 20 million won. Some 30 percent of them said they made bigger investments this year than in 2020, but they spent no more than 5 million won.
The think tank added that the pandemic has changed the way high earners think of work as a primary means to make a living, citing a comparatively low increase in wages as compared to the rise in their assets due to high market liquidity in the pandemic era.
The think tank also found about 60 percent of high earners want to buy houses with loans. But 78 percent of them said they would give that up if the mortgage rate hits 5 percent.
The maximum rates at some commercial banks have already surpassed the 5 percent mark, as the Bank of Korea raised its benchmark rate in November amid inflationary pressures.
By Choi Si-young (email@example.com