There are grades for commercial buildings and officetels down there. Now, when a credit crunch occurs, the prices will first drop for those with poor credit ratings, while those with high credit ratings will be maintained. The real estate situation is like having one side in fire and the other side in ice. Everyone knows this, so money is currently flowing in this direction. Therefore, the government manages these aspects; when housing prices rise significantly, they try to stabilize it, and when they drop, they intervene to support it. As a result, the volatility in housing prices is much lower compared to other countries. So, leveraging investments is the best option.

What do your parents think about the upcoming era regarding savings and real estate? Savings are too simple, so I think I should explain a bit about real estate. I'm not a real estate expert, but I tend to view it from a macro perspective while continuously engaging in real estate brokerage.

Deposits are simple because when deposit interest rates decrease, the opportunity cost becomes significant. If we enter an era where the real value of your assets cannot even be maintained, then even the conservative Japanese people, although not overwhelmingly, will start to look for higher coupon rates and take action. It's like migrating to a new habitat; if there's no food, you have to move to find it. This is simply what will happen in the future. 

Regarding real estate, many individuals are indeed involved in it, purchasing houses and acquiring multiple properties. They also invest in commercial spaces or officetels. Particularly in the case of officetels, if we consider real estate as having credit ratings similar to corporate bonds, the most premium properties would be the large office buildings in Gwanghwamun or Gangnam.

Now that there is almost no vacancy rate, these are considered high-quality properties. If we evaluate these based on their ratings, the so-called officetels are rated much lower. If we compare them to corporate bonds, they would be equivalent to triple B ratings. When corporate bond credit tightens, the prices of those with lower credit ratings drop first, while those with higher credit ratings remain stable. Recently, when we look at the 25 districts of Seoul, we can see the effects when interest rates rise. During the period when prices were dropping due to rising interest rates, we noticed that certain districts like Yongsan, Seocho, Gangnam, and Mokdong hardly saw any price drops, while others experienced slight declines. However, areas like Nowon and Sangyeon saw significant drops in prices depending on the credit tightening situation.

This means that things are changing. Similarly, when we look at the overall situation in our country, we see that the prices of commercial properties and officetels have been rising recently. However, I believe that these types of properties, which are primarily owned by individuals, may not be very promising in the future. 

Another characteristic of real estate is that it is difficult to answer the question of whether prices will rise or fall. Generally, people ask if real estate in our country will go up or down. As you know, the situation in our country is similar to this: on one side, there is a hot market with many people, while on the other side, some are putting their heads in fire and others are putting their feet in ice. Given this, it is indeed challenging to determine whether prices will rise or fall. You need to understand this division, as polarization in our country is already underway.

So, the main characteristic is that, even now, there is polarization, and it will continue to be polarized. This is the state of our country. There are regions where the population is decreasing due to this polarization, which is something we cannot ignore. Therefore, in the metropolitan area, key regions will inevitably maintain real estate value in that direction. Everyone knows this, so money is flowing into these areas. However, as I mentioned earlier regarding real estate, household credit has increased by about 500 trillion won, and among corporate loans, about 300 trillion won is related to the real estate sector. This means that about half of household loans are mortgage loans. Recently, a significant amount of money has been funneled into the real estate sector, and this is the result we are seeing now. With so much money invested, the outcomes are evident, and even now, due to policy funds and other factors, this trend continues.

Real estate is coming in, and there's nowhere to go. When I put my money into stocks, everything went down by about 20%, so I thought, This is the only thing I can trust. This is also the government's concern. They need to direct funds towards the investment market, but capital keeps flowing overseas, while domestically it is all moving into real estate. They are aware of this situation. However, this also presents a risk. If too much capital concentrates on high-quality real estate, there is a possibility of it becoming overvalued. Therefore, whether one way or another, it is not easy to increase the success rate of investments in real estate as it was in the past. In this regard, we need to select high-quality real estate and individuals should diversify their investments in these properties. The real estate I am referring to here is beyond just the homes where you live. The home you live in is not really an investment.

Rather than just doing it conceptually, this is an investment plus a necessary part of my life, which holds value because it is intertwined with the consciousness I need to live. So, putting that aside, I believe real estate is quite a good asset management tool. Generally, when people invest in real estate, they tend to buy a few commercial properties, officetels, or houses and receive rental income from them. However, I believe that as domestic demand continues to be structurally sluggish, we need to change our approach. We should focus on investing in quality office spaces, and this should also be diversified. This can be achieved through indirect investment, and I hope we can shift towards that direction. Recently, with the news of interest rate cuts, the possibility of a concentration in real estate seems to be increasing. How much do you think the bubble in the Korean real estate market is?

Bubbles are difficult to evaluate. I also have no means to do so. The reason is that if there are many rental properties, we can base the valuation on the rent and then compare it to the actual property values. Before the IMF crisis in our country, you listeners might find it hard to imagine, but buildings were leased under a jeonse system. Nowadays, we mostly see monthly rents. However, back then, even when major banks opened branches, they would enter with a jeonse of about 6 billion won. After the IMF foreign exchange crisis burst, when foreign investors came in, they were surprised to see such places existed. Now, how has the office market changed? It has all shifted to monthly rent. The discounted rent becomes the valuation of the building. This is how we clearly establish such valuations, indicating an overvaluation of prices.

These things don't deviate too much. However, in our country, the housing market still relies on the jeonse system, so when we consider the housing prices compared to jeonse, we have to analyze the valuation based on the percentage difference. I find it difficult to accurately value that part. Moreover, if we were to assess it differently, for example, how many times the salary should be saved over several years, there are other benefits to housing as well. One of them is education. Nowadays, marriage and community ties are quite significant; these values are often highlighted. For instance, people might say, I would pay an additional 500 million or 1 billion won because that value is much greater. It's similar to how we view luxury brands like Louis Vuitton.

When it comes to purchasing such things, the value that differs from its cost is created by the market. This value is actually generated by people as they buy and sell. Therefore, determining an appropriate valuation is not easy. In this regard, I find it somewhat difficult to evaluate. I mentioned that whenever there is a law, there is a debate about whether the law sets a rational price or not. Ultimately, no matter how much debate arises, the conclusion is that we cannot know until it actually happens. Therefore, I think it's challenging for me to comment on what the appropriate price should be. What I am ultimately saying is that we have to wait and see how it unfolds. As for the housing market in our country, it's hard to definitively say that we are experiencing a bubble, unlike other countries' housing prices.

When prices rise and fall dramatically, it can be quite terrifying to watch. However, in our country, when housing prices rise significantly, the government implements regulations. There are no countries that tell you not to take out loans; they provide loans. In Australia, for instance, they lend almost 100% to 110% of the property's value. They even lend for renovation costs. In a way, this could be considered a normal function. In our country, if they only provide a loan for 50%, then how are we supposed to cover the rest? Therefore, when housing prices rise significantly, the government intervenes to stabilize the market, and when prices drop, they support it again. This results in much less volatility in housing prices compared to other countries. What happens then is that leveraging investments becomes the best strategy. Assets with low volatility and a certain level of return are ideal for leveraging.

Investing is the norm, so why not leverage real estate? However, when housing prices skyrocket and then suddenly crash, like what happened in the U.S. in 2008 with the subprime mortgage crisis, people tend to become cautious after experiencing such fluctuations once or twice. In our country, we have mechanisms in place that prevent such drastic experiences. Even when prices drop significantly, there is adequate support, which is one of the factors that encourages people to jump into the housing market. When prices fall, the government often steps in to stabilize the market. This leads to a situation where money continues to flow into housing, which raises concerns about the real estate market. The government is still contemplating this issue, trying to find a way to keep money in the stock market instead of letting it gravitate towards real estate.

The part about breaking out into the market relates to what I mentioned earlier regarding low growth. The situation has been exacerbated by COVID-19, affecting small business owners, and the high debt levels. The third aspect is the flow of funds into the capital market. However, the flow of capital is moving toward real estate. This is a low-value situation. Money should circulate like blood in the human body, exchanging nutrients and increasing its intrinsic value. But when money circulates, it often doesn't generate much intrinsic value. While money is moving around, it is relatively stagnant in terms of value creation. This is the third aspect that I see as a critical issue. Therefore, I believe we need to be more cautious, and now is precisely the time for you all to focus on strong investments.

Through Lisa, I believe we should diversify into quality real estate and incorporate exceptional global assets. If you think about it, you can understand that you have created a soccer team with your assets. My soccer team consists of real estate and savings as my players. The question is, how will you select the players within your asset team? The most important thing is to consider European soccer. By bringing together the best players from around the world, a soccer team becomes solid. Similarly, your asset team should also recruit top global players. For instance, you should acquire shares in outstanding American companies. This represents a shift in perspective. Until now, in our country, when it comes to the game of assets, we have relied solely on real estate and savings.

In football matches, it is crucial to rely solely on domestic players. Now, we should consider bringing in top overseas players. This is something worth thinking about. The 60s and 70s generation doesn't change easily, as they have been doing things a certain way for 30 or 40 years since they were born. However, younger individuals are adapting to their environment and are changing. I hope that young people can have a new asset portfolio that aligns with the current era, rather than following the asset management strategies of the older generation. If you could share an analogy for the asset portfolio you recommend, I would appreciate it. For me, rather than focusing on the ratio of the portfolio, it's more about the ingredients you use when making bibimbap. First, what ingredients do you choose? Then, you need to decide on the proportions. For instance, should you add more bean sprouts or something else? So, it’s about that.

The key issue is which asset classes to bring in. Traditionally, real estate and deposits have been the main ingredients in our mix. However, I would like to recommend a different ingredient: bonds are better than deposits. Why are they better? Because they pair well with stocks. Recently, in early August, when stocks suddenly took a hit and prices dropped significantly, bond prices rose. On the other hand, deposit rates remain fixed. In that sense, having stocks as an asset is best complemented by holding bonds. Therefore, whether it’s deposits or bonds, there isn’t a huge difference in terms of risk when viewed over the long term. So, it would be good to include bonds in your asset mix. Additionally, we should divide the portion related to deposits and real estate. Naturally, we do hold a certain portion in deposits.

First, you transfer a certain portion from bonds to deposits, moving towards higher coupon REITs. Next, in terms of real estate, you should diversify through domestic quality assets via REITs. This includes office spaces, commercial malls, gas stations, and overseas offices, allowing for a diverse distribution. By diversifying in this way, it's no longer about capital gains; instead, you focus on obtaining high coupons. Therefore, you break down your deposits and real estate. You reduce deposits significantly and instead invest in bonds and REITs. 

As for stocks, in my opinion, the highest quality stocks are represented by the S&P 500. It's not about individual stocks; rather, it's about holding the S&P 500. Additionally, when our assets transition to the S&P 500 internationally, it inevitably brings along a 1+1 benefit.

There is something called the exchange rate. It's about currency. So, instead of just holding cash, if you buy the S&P 500, you will also have dollars. For example, if you invest 100 million won in the S&P 500, you will essentially have 100 million won worth of dollars. This way, you can hold dollar assets. Dollars are important. In our country, deposits and real estate are all domestic assets, and their value is represented in won. Holding only won exposes you to fluctuations in the won-dollar exchange rate, as well as other currencies. Therefore, I suggest that instead of just keeping deposits and real estate, you consider holding deposits, bonds, and the S&P 500 in dollars plus a few other currencies. Just having dollars would be sufficient. I think it would be good for you to change the ingredients of your financial bibimbap. After that, the ratio of these ingredients should depend on your preferences.

In various places in the United States and other advanced countries, when analyzing asset allocation in households, it is evident that household asset distribution varies greatly based on personal preferences. Some people have a strong aversion to stocks, while others may have different inclinations. Therefore, I can only provide information based on the materials I have, and how you choose to allocate those materials will depend on your financial situation and preferences. In the tenth chapter of the book you recently published, you introduced various financial products. Could you highlight any products worth mentioning, along with their pros and cons? Indeed, as the saying goes, the wise man of Omaha, this person not only excels in stock investment but also offers invaluable life advice and speaks very well. It's impressive how effectively he uses metaphors.

One story I want to share is similar to what we experience in our own country. Young people often ask, How can we make some money? The answer given is to buy S&P 500 stocks, and then spend the rest of your time on self-improvement. This simplifies things, doesn’t it? You can focus on that without worry. So, spend the rest of your time investing in increasing your productivity. What this means is that you should invest everything in raising your salary. This conveys an important message: if you are not a seasoned investment expert with years of experience, the most crucial asset is yourself. In fact, when considering how you will develop yourself in the future, if we look at a country's economic development, the most important factor is human capital. Therefore, the country must invest in developing that human capital.

The education system, training system, and welfare system are all being developed. The same applies to individuals; for personal development, the most important factor is one's own human capital. Therefore, under the systems established by the state, the key questions are how to cultivate expertise in the workplace and how to maintain good health. These are the areas where it is most desirable for you to invest your time. 

As for other assets, I recommend that you do not spend too much time trying to study various stocks intensively, as it often doesn't yield results. Instead, you can invest in something like the S&P 500, which allows you to not worry about it. In addition to the S&P 500, I would also mention a couple of other options, such as TDF, or Target Date Funds. These funds adjust the allocation of stocks according to age, which individuals should consider.

It's hard to think and say, I should reduce this, and so on. If you just buy one of these, it will automatically adjust your asset allocation for almost your entire life. This is what a target date fund is. A target date fund is something that embodies the most fundamental principles of investing. So, if you have just this one fund, you are set. However, if you are unsure whether the fund manager will manage the target date fund well, you can hold one or two or three target date funds from different managers. This is a form of diversification, as diversifying the managers is also important. So, you buy one target date fund and forget about it. The next focus should be on increasing your salary. After that, there is another...

This method pertains to retirement pensions, specifically IRPs. You may have heard of the default option, which is a pre-designated management system. There are eligible products for the default option, and you can choose one of these eligible products. These products have been evaluated for eligibility by a committee of experts, and only those that pass this evaluation are included. Therefore, there is a degree of objectivity, as financial companies are not simply acting for their own benefit; instead, they have been verified and approved by other committee experts. This means that the aspects you might need to verify have already been assessed by them. However, when we select eligible default products, it is not limited to just one; there are actually four types available, including high-risk options.

There are high-risk, medium-risk, and low-risk products available. So, depending on your preferences, you can choose one of these. However, I find the naming of these products quite unsatisfactory. If we simply label them as high risk, medium risk, and low risk, people tend to think that ultra-low risk is the best option. But you must remember this: ultra-low risk means ultra-low returns, while high risk is associated with higher returns. Therefore, when you choose a product, you need to consider whether you want to pursue high returns or opt for low risk with ultra-low returns. It's about selecting what aligns with your preferences. Low risk and ultra-low returns typically involve principal protection, such as fixed deposits. In the case of low risk, the proportion of bonds is very high, while in medium risk, the bond proportion is lower, and in high risk, the stock proportion is significantly higher. So, it depends on your individual preferences.

Therefore, when you look at it this way, people generally tend to follow habits. When someone asks what to do, it's common for them to take a conventional approach. However, younger individuals can simply choose high-yield investments. So, you can make decisions by selecting a target date fund and then choosing a qualified default investment option. As for the remaining aspects, you might wonder about various funds, like whether an India fund would be good. I've heard a lot about this too. How India will develop is part of my profession, so I need to stay informed about it. But for you, that's not a requirement. Therefore, after selecting your qualified option or TDF, leave the rest to the experts who constantly analyze and manage risks. Focus on investing to enhance your productivity overall.

This is a method to increase your asset returns. Many of you only think of financial assets or tangible assets when considering asset returns. However, an increase in your salary is also a significant rise in asset returns. Therefore, your portfolio should include both financial assets and tangible assets, as well as your personal assets, to enhance the overall return. If you invest too much time in this and your salary increases only slightly, it becomes a very inefficient investment. I believe that young people should definitely consider what Warren Buffett has said; I truly see it as the right answer.

아파트 공화국은 진작 끝났다, 한국 부동산 '이렇게' 변할 겁니다 (김경록 고문 / 2부)

* 출연신청 & 제휴 및 광고문의 : ssid@dpnstud.io
