How Did Korean Billionaires Get Rich?

The number of billionaires in Korea is on the rise even as millions struggle to make ends meet in a depressed economy exacerbated by the coronavirus epidemic.

KB Kookmin Bank surveyed 400 people who own more than W1 billion in financial assets alone to find out how they got so rich and what they do with their money. It also turned to data from the Bank of Korea, Statistics Korea and the National Tax Service for answers (US$1=W1,136).

Some 354,000 people in Korea had financial assets over W1 billion last year, more than double the figure of 10 years ago. Those who owned W10-30 billion numbered 24,000, while 6,400 owned more than W30 billion.

They owned a combined W2.2 quadrillion in financial assets, up a staggering 90 percent from 2010.

How did they do it? Until 2011, 45.8 percent of wealthy Koreans cited real estate investments as their means of getting rich, but this year that fell to 25.5 percent. Instead, 37.5 percent credited business earnings, compared to just 28.4 percent in 2011.

KB attributed the trend to an increase in people who became rich in the venture and start-up boom that started in 2010.

The proportion who got rich through inheritance and gifts increased from 13.7 percent to 19 percent over the same period. Yet two out of three billionaires said they do not feel rich and put the threshold at W7 billion.

In the early 2010s, rich Koreans gradually reduced the proportion of real estate in their asset portfolios but then started increasing it again in 2016, rising to 56.6 percent this year as property prices spiraled.

COVID-19 also impacted the wealthy, with 27.5 percent saying their assets declined due to the epidemic.

That means they are reluctant to invest. At present, they turned 16.2 percent of their assets into cash or deposits, up from 14 percent last year. But they are optimistic about the stock market with 24.5 percent planning to boost their equity holdings and only 11 percent considering the opposite.

More than half or 57.1 percent cited stocks as favorite long-term financial investment.