Looking at Household Financial Assets in Major Countries
58% of US Financial Assets Invested in Financial Investment Products
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[Asia Economy Reporter Junho Hwang] An analysis revealed that last year, 64.4% of the total assets of South Koreans were concentrated in non-financial assets such as real estate. In contrast, in the United States, where many people are wealthy through pensions, 71.5% of total assets are invested in financial assets, highlighting the need to focus on expanding pension assets by utilizing default options in retirement pensions.
According to the Korea Financial Investment Association's "2022 Comparison of Household Financial Assets in Major Countries" released on the 25th, the proportion of financial assets in South Korean household assets was 35.6% as of the end of 2021, an increase of 0.8 percentage points from the previous year. Meanwhile, non-financial assets such as real estate accounted for 64.4%, indicating that most assets were concentrated in non-financial assets.
Among financial assets, cash and deposits held the largest share, recording 43.4%. On the other hand, financial investment products accounted for 25.4%. Of these, 20.8% were concentrated in stocks, while bonds and funds each accounted for about 2.3%.
The association analyzed that since 2018, the proportion of stocks has increased, while the shares of funds, bonds, insurance, and pensions have gradually decreased. Last year, household funds managed through equity securities or investment funds, excluding market valuation, reached a record high of 115 trillion won (87.6 trillion won in domestic stocks, 22.9 trillion won in foreign stocks, and 4.8 trillion won in funds). Comparing year-end statistics that reflect asset value fluctuations, households acquired a net total of 147 trillion won in stocks last year.
However, unlike South Korea, more than 50% of funds in countries such as the United States, Japan, and the United Kingdom were concentrated in financial assets. The proportion of financial assets was highest in the United States at 71.5%, followed by Japan at 63% (2020), and the United Kingdom at 53%. In particular, in the United States, cash accounted for 13.2% of financial assets. Most were concentrated in financial investment products (58.0%), with stocks accounting for 40.2% and funds 15.5%. Due to stock price increases, the asset value of stocks (2.5 trillion dollars) rose, resulting in a 3.9 percentage point increase in the share of financial investment products within household financial assets compared to the previous year.
Since COVID-19, real estate prices have risen not only in South Korea but also in major advanced countries such as the United States. Accordingly, the proportion of non-financial assets increased by 0.8 percentage points in South Korea, 1.0 percentage point in the United States, 1.6 percentage points in the United Kingdom, and 2.8 percentage points in Australia compared to the previous year.
An official from the association stated, "The proportion of financial assets in South Korean household assets remains low compared to major countries, and the share of cash and deposits within financial assets is high. For stable household asset allocation, it is necessary to reduce the proportion of non-financial assets in the long term and expand the share of financial assets such as financial investment products and retirement pensions by utilizing recently introduced default option systems in retirement pensions."
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