Is a bank savings account even a safe asset?
If you deposited 1M KRW in 2019, it's 1.15M now, but inflation was 18.2%. (Real value: 975k KRW)
If you recalculate based on the 48.7% return of US Treasuries (the global benchmark), the real value is only 768k KRW.
Korea has lower growth than the US but printed more money, so the Won has basically turned into toilet paper.
-> People who just saved money became the suckers.
When the Bank of Korea prints money like this, it's basically stealing from savers to bail out debtors.
In this situation, taking out loans to buy a house becomes a smarter choice than putting money in the bank.
Because of this, many 2030s (Gen Z/Millennials) are 'Yeong-kkeul'-ing (pulling every last cent) to buy real estate just to avoid falling into poverty.
Since the system keeps helping debtors, Korea's household debt has reached extreme levels (2nd highest among major countries).
When the Bank of Korea dumps money, people with high credit scores get easy, low-interest loans to buy assets like Gangnam apartments.
This means every time money is printed, the wealth gap widens. Currently, the top 0.92% own 60% of all financial assets.
Until now, printed money mostly stayed domestic, but as overseas investment became active, dollar assets became rivals to Gangnam apartments.
Since all that cash is leaking abroad, the exchange rate skyrocketed.
Looking at returns since 2019: Gold > NASDAQ >> KOSPI > Gangnam Apt > US Treasuries > Won Savings.
Investing in US stocks yields much higher returns than Gangnam apartments.
Of course, a house provides residential stability.
If you factor in a 2.5% rental yield, the return on a Gangnam apartment is 94%.
But buying and selling a house involves various taxes.
Factor those in, and the Gangnam apartment return drops to 38.5%.
US stock returns also drop from 310% to 250% after taxes, but they are still overwhelmingly better than Gangnam.
What about nationwide real estate? After taxes, it turns out only Gangnam actually went up.
Gangnam apartments are so expensive they're basically an asset for the elite only.
If you can't afford Gangnam and try to buy nearby instead, you might end up like Manager Kim...
Update)
"Users are debating the merits of US stocks over domestic real estate, but the thread quickly devolves into a heated argument over whether you can even use leverage to buy in Gangnam anymore due to strict loan regulations."
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