In this blog post, we’ll explore how to read economic articles not just as sources of information, but from the perspective of investing and personal finance. From the pitfalls of average annual salary statistics to financial trends and how to identify future growth industries, we’ll share insights on how to make the most of economic news.
The Story of Our “Glass Wallets”
From here on, we’ll focus on the stories of salaried workers within households. The income of salaried workers is often referred to as a “glass wallet.” This nickname stems from the fact that their finances are completely transparent, making it easy to collect taxes. Salaried workers are, in other words, wage earners. According to the National Tax Service, there are approximately 20 million wage earners in South Korea today (based on those who filed year-end tax settlements for 2021). Given that South Korea’s population is approximately 52 million, this group accounts for about 40% of the total population. It’s likely that a significant number of readers of this book are either wage earners or future wage earners.
Wage earners come from a wide range of socioeconomic backgrounds. Let’s now examine these groups one by one and explore ways to manage our “glass wallets” more wisely. We will also briefly examine changes in the financial environment that are closely tied to our daily lives.
Same Salaried Workers, Different Reasons
“Average Annual Salary for Office Workers Last Year Was 40.23 Million Won… Number of Those Earning Over 100 Million Won Exceeds 1 Million” (Yonhap News, Dec. 7, 2022)
Articles about the average annual salary of salaried workers appear frequently. People often look only at the numbers and feel happy if their salary is higher than the average, or disappointed if it’s lower. However, since the word “average” hides various meanings and pitfalls, there’s no need to obsess over it.
First, since the article above was published in 2022, the “last year” mentioned in the title refers to 2021. 2021 was a period of relatively strong economic conditions, and quite a few people made profits from investments in stocks and other assets. Therefore, when looking at statistics, one should first check the reference period and make judgments while also considering the economic conditions at that time.
Just because the average annual salary is 40 million won does not necessarily mean it represents the “median level.” As mentioned in the article’s headline, the number of people earning annual salaries in the 100 million won range has surpassed 1 million. Considering that the total number of workers is approximately 20 million, the 1.12 million people earning over 100 million won account for about 6%. Although not mentioned in the headline, the article’s body also states that approximately 7 million people (35%) earn so little that they do not pay income tax.
Furthermore, this article discusses the number of comprehensive income tax payers. Comprehensive income tax refers to a tax levied on various types of income—such as earned income (wages), interest income, dividend income, rental income, and pension income—combined into a single tax base. In 2021, approximately 9.5 million people paid comprehensive income tax.
For example, a wage earner who also runs a rental business and receives rent, or who earns significant amounts of interest on deposits and stock dividends, is required to pay comprehensive income tax. However, since these types of income are not classified as earned income, they are not reflected in average annual salary statistics. In particular, profits earned through stock trading are not included in earned income.
This article also discusses regional differences in annual salaries. The annual salaries of people residing in Seoul, Sejong, and Ulsan (more precisely, those whose registered address is in those regions) were relatively high, while those of residents in Gangwon and Jeju were relatively low.
As such, there is a very wide variation in earned income among individuals, and it also varies by region. Furthermore, actual economic status can differ depending on whether one has income sources other than annual salary. Therefore, we do not need to be overly fixated on the figure of the average annual salary. Moreover, differences in “work experience” are one of the key reasons for significant salary gaps.
Average Household Income Last Year Was 64 Million Won… One-Fourth of Households with Heads in Their 40s and 50s Earned Over 100 Million Won (Yonhap News, Dec. 1, 2022)
Looking only at the headline of the article above, one might assume that our household’s income would need to be around 64 million won to be considered average. One might also mistakenly believe that one in four households headed by someone in their 40s or 50s automatically earns an annual income of 100 million won or more. However, a closer read of the article reveals that the situation is not that simple.
The first thing to check is the timing of the survey. These statistics are based on data collected in 2021 but were not released until late 2022. This does not mean the release was delayed; rather, since it was a large-scale survey covering all households nationwide, the process of collecting, analyzing, and compiling the data required a significant amount of time.
The problem is that the economic conditions in 2021 and 2022 were vastly different. While real estate prices and stock prices rose sharply through 2021, the economy slowed rapidly in 2022. Therefore, when encountering articles with terms like “last year” or “average” in the headline, it’s essential to get into the habit of verifying the specific time period on which the statistics are based.
What stands out particularly in this article is that the “median” is also presented. The mean is calculated by adding all data points and dividing by the number of data points, while the median refers to the value located in the middle when the data is arranged in order of size.
For example, if 9 out of 10 people earn 1 won and the remaining 1 person earns 11 won, the mean is 2 won, but the median is 1 won. Therefore, the wider the wealth gap, the greater the likelihood that the mean will distort reality. In fact, as the article points out, while the average household income is 64 million won, the median is 50 million won—revealing a significant discrepancy between the two figures.
Looking at the income distribution, households with an annual income of 10 million won or more but less than 30 million won accounted for the largest share at 23.2% of the total. Among these, 42% had a head of household aged 29 or younger, while 36% had a head of household aged 60 or older. In other words, the lower-income brackets were predominantly made up of young people who had just entered the workforce and older adults who had already retired.
In contrast, households with an annual income of 100 million won or more accounted for 17.8% of the total, and among these, about half had a head of household in their 40s or 50s. Ultimately, the incomes of young people who have just begun their economic activities and retired seniors are relatively low, while the incomes of middle-aged people who have risen to mid-level management or executive positions in companies are relatively high.
It is necessary to examine not only the scale of income but also the manner in which it is earned. Among heads of households in the 10 million to 30 million won annual income bracket, about 40% were engaged in temporary or day-labor jobs. In contrast, among households with an annual income of 100 million won or more, about 28% of heads of household were in permanent positions. Simply put, this means that the more likely one is in a permanent position, the higher their income tends to be, while the more likely one is in a non-permanent position, the lower their income tends to be.
When examining the article’s content point by point, the conclusion is actually quite common sense. The income of heads of household who have worked stably in permanent positions for a long time after entering the workforce is high, while the income of heads of household who work in non-permanent positions or have been economically active for a short period is low. The article’s headline isn’t incorrect either.
Nevertheless, the reason for examining this in such detail is clear. Headlines containing the word “average” should not be skimmed over; only by carefully examining the meaning and context of the statistics within them can we accurately understand the information and make sound judgments.
How to Approach Articles on Personal Finance
In fact, the articles on salaried workers introduced earlier often serve only to provide fragmentary information or satisfy simple curiosity. Therefore, personally, I hope readers do not attach excessive significance to such articles. This is because there are a wide variety of variables and factors behind figures like “average annual salary” or “average wage.” What we should truly focus on are articles that provide substantive information—such as economic trends and growth patterns—and offer clues for making sound economic judgments.
Beyond Credit Card Tax Deductions… 10 ‘Top Tips’ for Tax Savings on Year-End Tax Settlements (Newsis, Dec. 18, 2022)
So, are financial planning articles like the one above actually helpful? At first glance, they might seem so. However—and this might be a bit of a letdown—these articles aren’t actually all that helpful. This holds true even when article titles feature sensational phrases like “top tips,” “secrets,” or “you’ll lose out if you don’t know this.”
So, does that mean there’s no point in reading these articles? Not exactly. That’s because you can gain much more from reading them than from not reading them.
News and articles are like the sketch you use to complete the big picture. It’s not easy to start drawing something without any framework. However, if you have a sketch drawn by someone else, it becomes much easier to apply your own perspective and artistic style on top of it. Reading articles can be seen as a process of grasping the overall outline with the help of others.
If you have a general picture in your mind, it’s easier to set your own direction and strategy. It also becomes clearer what to emphasize and what to be wary of. Therefore, it is most efficient to first read economic articles to grasp the overall trend, and then supplement that with detailed information on financial products or investment methods through online communities or specialized resources.
If you focus solely on the details from the start, you’re likely to make the common mistake of “seeing the trees but not the forest.” For example, if you’ve never invested in stocks before but buy a specific stock based solely on someone else’s advice, you’re highly likely to fail. This is because such information doesn’t reflect the broader market trends.
On the other hand, news and articles reveal the overall economic trends, emerging trends, and the mistakes people repeatedly make. If you want to be successful at personal finance, reading articles is not an option—it’s practically a necessity.
The Emergence of New Finance: You Must Understand It to Make Use of It
Technology is advancing every day, and the financial markets are also changing rapidly alongside the latest technologies. Let’s briefly review some financial concepts that are useful not only when reading economic news or articles but also in everyday life.
The first concept you need to know is FinTech. A portmanteau of “Finance” and “Technology,” it literally refers to the integration of information technology (IT) into financial services.
Take banking as a simple example. These days, few people use paper passbooks. The number of people visiting banks in person just to make a simple transfer has also dropped significantly. Instead, online and mobile banking have become commonplace. Simply by installing a banking app on a smartphone, you can handle most financial transactions. While this is now a familiar sight, it is also a prime example of a FinTech service.
As the number of customers visiting physical branches declines, banks are reducing their branch networks. In contrast, online-only banks—such as KakaoBank, K Bank, and Toss Bank—which operate without physical branches, have already become a natural part of our daily lives.
As this shows, while technology makes our lives more convenient, it also brings new threats. That said, we cannot stop technological progress itself. Technological advancement is like the flow of water; once its direction is set, it cannot be reversed. Ultimately, what matters is not resisting change but understanding and adapting to the trend.
The framework of the fintech industry has not yet been fully established. With a lack of accumulated experience, there is no shortage of trial and error, and this process is likely to continue for the foreseeable future.
These days, it is no longer necessary to visit a bank or securities firm in person to open a financial account. With just a smartphone, users can open accounts and conduct financial transactions remotely.
In the early stages of adoption, security concerns regarding remote financial services were frequently raised. However, financial institutions have addressed these issues by introducing various identity verification procedures, such as facial recognition using smartphone cameras and verification of ID authenticity.
Furthermore, the digital certificate system—once an essential element of online financial transactions—is evolving into a much more convenient method. It has now become commonplace to use smartphones even for contracts involving large sums of money, such as real estate transactions.
The boundaries between financial institutions are also gradually breaking down. Recently, financial companies have been actively promoting “MyData” services through their own applications.
MyData refers to a service that allows users to manage account and asset information from multiple financial institutions through a single application. From the perspective of financial institutions, this enables them to gain a more accurate understanding of customers’ assets and spending patterns, allowing them to recommend suitable financial products based on this information. On the other hand, users benefit from being able to conveniently manage their assets by selecting the services best suited to their individual circumstances.
Typical MyData services include household budget tracking, spending analysis, personalized credit card recommendations, investment product recommendations, and loan product comparisons. Recently, the scope of these services has been gradually expanding to include areas such as health management.
Meanwhile, P2P (Peer-to-Peer) financial services are also gradually being incorporated into the mainstream financial system. In the traditional financial system, banks provided loans to individuals and managed them. In contrast, P2P finance connects individuals directly to facilitate the exchange of funds.
Those lending money act as investors, while those borrowing money receive loans. The market has grown because both parties can expect more favorable terms than when using traditional financial institutions. Investors can expect higher returns than with deposits, and borrowers can raise funds at relatively low interest rates. However, it is important not to forget that the risks are correspondingly high.
Financial services utilizing blockchain technology are also steadily emerging. This is a concept distinct from simply buying and selling virtual assets. The most widely known example of blockchain-based investment is NFTs (Non-Fungible Tokens). While they once garnered explosive interest, the initial hype has now subsided somewhat.
On the other hand, there are sectors that, while not receiving significant attention, are growing steadily. A prime example is “fractional investing.” Fractional investing refers to a method of investing in or trading actual assets or rights by dividing them into multiple shares.
Services that allow investors to purchase fractional shares of music copyrights became widely known through Musicow, and the practice of multiple people jointly owning high-value artworks is also gradually expanding. These investments are made possible by blockchain technology, which securely stores transaction records and prevents forgery or tampering.
Fractional investment products have laid the foundation for growth by being recognized as securities under the Capital Markets Act. This has opened the door for the general public to more easily invest in high-value assets that were previously difficult to access. Recently, this trend has been expanding beyond real estate to various sectors, including loan receivables and Hanwoo beef.
However, while new investment products may seem innovative and attractive, it is essential to remember that they may involve risks that have not yet been fully verified. Whether traditional or new, every investment carries both potential returns and risks.
Interest in virtual spaces is also steadily growing. Some predict that virtual spaces, epitomized by the metaverse, will connect to the real economy in ways distinct from existing online spaces. Blockchain is frequently cited as the core technology enabling this connection.
No one can accurately predict exactly which technologies and concepts will transform our daily lives in the future. What is clear is that technology has always advanced at a pace that surpasses people’s imagination, and that whenever new technology emerges, finance and capital are always moving behind the scenes.
How to Identify Future Growth Industries
One of the things people are most curious about is the future. This is partly because they wonder how the world will change, but also because they want to predict which industries or sectors will grow in the future in order to maximize their investment returns. Sectors often referred to as “future growth engines” frequently appear in economic news under keywords such as “new technologies” and “growth drivers.”
Anyone who pays close attention to the news or has extensive social experience knows full well that just because a sector is featured in the news does not guarantee its success. No one can know the future with certainty. Therefore, what we should look for in the news is not a definitive answer, but “potential.”
If you read the news carefully, you can get a rough idea of the sectors likely to attract capital and attention over the next few years. So, what specifically should you look for in the news?
First is the policy direction of the South Korean government. Most governments use campaign pledges and policies to clarify which sectors they will focus on investing in and fostering. For example, the Lee Myung-bak administration promoted “green growth,” the Park Geun-hye administration promoted the “creative economy,” and the Moon Jae-in administration promoted the “Fourth Industrial Revolution” as their main policy pillars.
The reason funds are concentrated in specific sectors based on policy is that government budgets are allocated to them. Government budgets are ultimately funded by taxpayers’ money. Furthermore, since the success or failure of a policy is directly linked to political achievements, each government devotes considerable attention and effort to implementing its policies. Therefore, examining which industries the government intends to support and foster provides a crucial clue for forecasting future industries.
The second factor is policy changes in major countries. Since today’s economy is highly interconnected across nations, policy changes in a specific country can affect global markets.
For example, if the U.S. government announces that it will intensively foster the semiconductor industry domestically or declares that it will exclude China from its supply chain, the global semiconductor market reacts immediately. China’s Belt and Road Initiative and its push for semiconductor dominance are also national strategic projects backed by massive capital investments.
Although it may be somewhat ambiguous to call them “policies,” international events—such as Russia’s decision to continue the war—also have a significant impact on commodity prices and financial markets. Ultimately, the policies and decisions of major nations can be considered key variables that determine the growth and decline of specific industries.
The third factor is global campaigns and international trends. These movements often originate in developed nations and spread worldwide.
A prime example is environmental issues. As calls to address the climate crisis have grown louder, the concept of ESG (Environmental, Social, and Governance) has taken root, and specific goals such as carbon neutrality and RE100 (a global campaign in which companies commit to sourcing 100% of their electricity from renewable energy) have emerged.
These international trends have the potential to transform the industrial structure itself. While highly relevant sectors—such as the electric vehicle and rechargeable battery industries—gain growth opportunities, some existing industries may shrink or undergo restructuring. Therefore, examining the direction of global campaigns is a crucial way to understand the future of industry.
The final factor is technological advancement.
The widespread adoption of smartphones, the rollout of ultra-high-speed internet networks, and the development of high-performance semiconductors have created new markets that did not exist before. YouTube, which has become part of our daily lives, is a prime example of a platform that has given rise to new professions and business sectors.
Recently, with the emergence of new technologies and concepts such as big data, artificial intelligence, autonomous driving, and telemedicine, related industries are also growing rapidly. In particular, major technology companies listed on the U.S. Nasdaq market are leading these changes. Blockchain-based virtual assets and the metaverse, which we examined earlier, are also among the new markets whose outcomes cannot yet be definitively determined.
One more point to keep in mind is that the four factors we’ve examined so far do not operate independently of one another. Government policies, international affairs, global campaigns, and technological advancements influence one another, sometimes cooperating and sometimes clashing.
News reports present a fragmented view, focusing on events that occurred at a specific point in time. However, the process leading up to those events and the subsequent developments are far more complex. Various industries, companies, and nations are constantly competing and evolving in an effort to secure a leading position in future markets.
Ultimately, amid countless changes and competition, those who predict the final winners will profit, while those who fail to do so will suffer losses. This process will continue to repeat itself in the future. Therefore, reading the news is not simply a matter of confirming the present, but rather a process of exploring future possibilities.
