The year 2024 marks a new beginning as we emerge from the tunnel of the COVID-19 pandemic, and it is more important than ever to prepare for economic uncertainty. Hana Bank publishes the "Korean Wealth Report" annually, analyzing the wealth management practices and lifestyles of the wealthy in South Korea. The 2024 report delves deeply into the changes and practices in asset management among the wealthy.
Economic Outlook and Wealth Management Plans of the Wealthy
Real Economy Outlook
The outlook for the real economy in 2024 among the wealthy has seen an increase in positive views, yet negative opinions still prevail. The positive outlook has risen to 37%, but the negative outlook remains high at 63%. This indicates that the wealthy are cautiously managing their assets amid uncertain economic conditions.
Asset Portfolio
Seventy percent of the wealthy plan to maintain their asset portfolios similarly to the previous year. The response to "reduce real estate and increase the proportion of financial assets" is at 10%, reflecting cautious optimism for a recovery in the real estate market. Within financial assets, the proportion of deposits has increased the most, leveraging the high-interest-rate environment for stable asset management.
Wealth Management Tips from Hana Bank PBs
Bonds
Bonds are expected to remain attractive in 2024. With expectations of interest rate cuts spreading, bond investments are promising for both high-interest income and capital gains from rising bond prices. It is recommended to balance long-term and short-term bonds to pursue stable returns.
ETFs
To manage market volatility, it is advisable to use dollar-cost averaging with ETFs for stable investments. Although interest rate cuts are expected to positively impact the stock market, the potential volatility calls for a strategy of spreading purchases to manage risks effectively.
Foreign Currency
Diversifying investments into safe assets like foreign currency deposits and insurance is crucial. Products such as dollar and yen deposits, which are not subject to capital gains tax, offer stable returns and are recommended for long-term holding.
Asset Management in the Era of High-Interest Rates, Inflation, and Exchange Rates
Changes in the Asset Portfolio of the Wealthy
In the era of high-interest rates, inflation, and exchange rates, the asset portfolios of the wealthy have shifted. The proportion of aggressive assets like real estate and stocks has decreased, while cash equivalents and bonds have increased. Defensive investments, such as gold and alternative assets, have become more popular.
Financial Asset Management Performance
The financial asset management performance of the wealthy in 2023 remained similar to the previous year. Deposits continued to have the most positive impact amid high-interest-rate conditions, and bond investments were notable for capital gains and tax benefits. Notably, those with financial assets over 3 billion won had a bond ownership rate exceeding 50%.
Differences in Wealth Management between Men and Women
Approach to Asset Management
Men and women differ in their approach to asset management. Men tend to be personal and aggressive in their investments, quickly responding to market conditions. Women, on the other hand, tend to be family-oriented and conservative, focusing on safe financial products and the family’s financial well-being.
Asset Composition
Men prefer commercial real estate and high-risk assets, while women prefer residential real estate. Men have a higher proportion of investment assets, while women have a higher proportion of savings assets, reflecting their more conservative management approach.
Routines and Lifestyles of the Wealthy
Routines
The wealthy start their day by catching up on current events through newspapers or news and invigorating themselves with morning exercises or walks. They show a higher interest in economic news compared to the general public, who are more interested in entertainment and sports.
Hobbies
Wealthy individuals engage in physical activities such as walking, golf, and fitness to maintain their health. They also enjoy cultural activities like art exhibitions and cooking, enriching their quality of life.
Reading Habits
The wealthy read about one book a month, preferring humanities and social sciences to satisfy their intellectual curiosity. In contrast, the general public tends to prefer novels and self-help books for entertainment and self-improvement.
Conclusion and Implications
The 2024 Korean Wealth Report emphasizes the importance of economic diversification and strategic wealth management amidst the changing landscape of asset management practices among the wealthy. Despite the uncertain economic environment, the wealthy pursue financial stability through careful asset management, leveraging various financial products and diversified portfolios to manage risks.
reference: Hana Institute of Finance
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| Wealth Management in South Korea |
