Are You "Rich?"
An interesting new survey on the state of Korea’s rich offers up some interesting insight into how much money people have, what they are doing with it, and how much it takes until they define themselves as ‘rich’.
BUSAN, South Korea -- Most people I know would be quite happy with a million dollars. Besides the obvious pleasure of being able to walk around confidently whistling that song by the Bare Naked Ladies, you could go to sleep at night comforted by the fact that, well...you’re rich!
Rich, that is, if you are not a rich South Korean. According to a recent survey by KB Research in Seoul, just 32% of Koreans with assets above $5 million consider themselves rich. And when asked to define exactly how much money you need to be worthy of the moniker ‘rich’, 43% responded that calling yourself or somebody else ‘rich’ would first require amassing assets of at least 10 billion won ($9.4 million).
And while that was one of the more interesting findings from the study, the survey of 300 rich people living in the Seoul area also offers insight into who’s got the big money and what they are doing with it after they run out of room stuffing it in the mattress.
The parameters of the report define someone as being ‘wealthy’ when in possession of at least 1 billion won ($950,000) in investible assets --in short, millionaires. Around 130,000 individuals fell into that category nationwide in 2010, up 21.3% from the previous year and growing at an annual clip of around 20% since 2006, with the exception of 2008 when Barrack Obama single-handedly brought down the entire world economy upon taking his oath of office.
The total amount of investible income in the entire country amounts to around 288 trillion won ($272 billion) as of 2010. The study found that 0.26% of Koreans control 13% of the country’s total liquid assets.
The survey pegged the average household for having a ‘rich income’ at 214 million won ($202,000) a year. That is more than four times the average-income household, which brings in an average of 47 million won.
What do they do with the dough?
Above all else, rich Koreans are primarily concerned with two outlets for their bulging bank accounts: their kids and real estate.
It is no surprise that the Korean millionaire money spigot flows most freely on educating the kids. A whopping one-quarter of household spending, the largest of any spending category, went to schools, hagwons and private tutors. This is considerably higher when compared to those Koreans with more earthly incomes who spend a mere 15.3% of their hard-earned won on educating the young’uns.
On average, worldwide, those are both high numbers ---regardless of where you fall in the income brackets. In comparison, Americans in the bottom income bracket spend nearly 4% of their income on education, and wealthy Americans chipped in around 3% on their kid’s schooling.
Real estate accounts for 58% of total assets for the wealthy. Of that 46.2% is invested in property in which they live, while 13.4% was spent on investment property. Financial assets, such as market investments make up 37% of the total followed by art and club memberships at 5%. The study did not define what clubs people are spending so much money on, but joining a painting club could reduce money spent on art by simply painting or sculpting a masterpiece themselves.
The study also found that the richer an individual is the more likely they are to throw the bulk of their assets into real estate. People with assets totalling more that 5 billion won ($4.7 million) responded that 76.2% of their money is invested in real estate. When the survey asked all respondents how they plan to grow their wealth even more, 45% said real estate, 35% in business investments and 17% in financial investments.
KB Research also noted that getting accurate insight into how much and where the country’s rich were putting their money was difficult because Koreans consider being showy or talking about money as undignified. I suppose that means one shouldn’t expect to see any of the many dressed to the hilt, carrying $5,000 Gucci bags, whistling Bare Naked Ladies when walking down the street in Haeundae.
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