High earners in 20s, 30s turn to investments as low earners get left behind in widening asset gap

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High earners in 20s, 30s turn to investments as low earners get left behind in widening asset gap

Published: 08 Jul. 2025, 15:09 Updated: 08 Jul. 2025, 18:50

Audio report: written by reporters, read by AI

Job seekers look at notices at a job fair held in Incheon on June 24. [YONHAP]

For Koreans in their 20s and 30s, this stage of life is typically when they save for a home and lay the groundwork for retirement. Among this demographic, high-income earners are aggressively growing their wealth through investments, while those with lower incomes tend to prefer safer savings options like fixed deposits — a trend that is widening the asset gap.

Experts warn that if this continues, asset polarization will become even more pronounced by the time these groups reach middle age.

According to a recent report by the Korea Capital Market Institute on June 30, the asset gap between high-income young households — those in the top 20 percent with annual incomes of around 93 million won ($68,700) — and low-income households in the bottom 40 percent, earning about 39 million won or less, grew from a 3.7-fold difference in 2019 to 4.7-fold last year.

The primary reason for the widening gap appears to be how each group manages and grows its money.

Among high-income earners, the share of savings and deposits declined slightly from 49.2 percent in 2019 to 48.8 percent last year. In contrast, that figure rose from 48.4 percent to 62 percent among low-income earners. During the same period, the share of stocks, bonds and fund investments rose from 15.7 percent to 28.6 percent among high-income groups, and from 7.1 percent to 16.6 percent among low-income groups.

“Since the Covid-19 pandemic, the share of young households holding stocks, bonds and funds has nearly doubled, largely driven by those with higher incomes,” said Lim Na-yeon, a research fellow at the institute. “Differences in the scale and strategy of financial asset building during youth could lead to even more severe inequality in the future.”

The housing boom in recent years has also contributed to the growing gap. A study by the Korea Institute of Finance found that for high-income earners in their 20s, a 1 percent increase in financial debt corresponded to a 0.346 percent rise in real estate assets. Among low-income earners, the figure was only 0.169 percent.

“This indicates that high-income earners are buying more expensive or multiple properties, which inflates the value of their assets,” said Kim Dong-hwan, a senior research fellow at the institute.

Some also point to the “parent advantage” — inheriting real estate and other assets — as a key reason for the widening asset gap over the past five years. This benefit has recently extended to financial investments.

A study by Hana Institute of Finance showed that one in five cryptocurrency investors, or 22 percent, are considering investing in coins for their children. Living with parents reduces housing and living expenses, and financially savvy parents often share investment tips with their children.

Young people without parental support are left with strategies like “yeongkkeul,” or maxing out their loans, and “bittoo,” borrowing to invest. Even so, many say they lack the knowledge to build wealth effectively.

“I try to save half of my salary, but I don’t think I can manage stocks or crypto well, so I only use fixed deposits," said Park, a 29-year-old in the fourth year of his career.

According to the Hana Institute, 51 percent of people in their 20s and 48 percent in their 30s said curiosity was their main reason for investing in cryptocurrency. When chasing trends or driven by "FOMO" — the fear of missing out — such speculative investments carry high risks.

To address this growing divide and create upward mobility, the new administration has proposed a program that translates roughly to “the Youth Future Savings Account” as a campaign pledge. Under the plan, the government will match a portion of the savings at maturity — targeting low-income youth who tend to invest conservatively in savings products.

“We need a broader range of tailored financial products to help low-income youth develop long-term and stable asset management skills,” Lim said.

Kim added, “Since youth is the time to grow wealth, support for rental housing would be more beneficial than home-purchase assistance, especially for low-income individuals.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK YU-MI [[email protected]]