Young Koreans on Fire to Get Rich
The idea of easy money and very early retirement was vogue for the last two years. Now consequences are coming home to roost.
Early this week I was speaking with a thirty-something female Korean acquaintance, and she let out a great big sigh when the conversation turned toward the topic of finance.
"All my shares. They are now worth less than half what I paid," she buried her face in her hands in a mock-gesture at resignation.
I tried to comfort her. "One needs to be a little patient when investing. Give it a few years and the market will recover," I said.
"I know, but I really wanted to join the FIRE tribe!"
If you don't know, the FIRE, a.k.a. "financial independence, retire early", tribe (파이어족 in Korean) stands for those who retire at a relatively young age, often between mid-thirties and early forties. While not unique to South Korea, that phrase has been in vogue for the last couple of years among the country's young white-collar set.
The goal is to create a sufficient cash reserve and a stable revenue stream through investment in cryptocurrencies, stocks, real estate or some combination of the three. Then say goodbye to your employer, worries over job security and your evil bosses. All that remains is sailing blissfully into a life of leisure (plus or minus odd part-time gigs you take up to supplement the income).
A vision of living without financial concerns has taken hold across developed countries. It's not hard to find young non-Koreans who also extoll the wonders of escaping the "rat race". YouTube for one is riddled with videos by such seemingly visionary dropouts who are living it up in places like Bali and Thailand.
Similarly in South Korea, where lifetime employment at a same company was once the norm and a goal, that compelling picture of freedom has been touted as a model to emulate, but with a key difference: if FIRE tribes elsewhere stress the virtue of reducing expenses and perhaps even moving to countries with lower costs of living to make ends meet, the central component of the South Korean approach has been aggressive financial investment.
Single Fire, a popular YouTube channel for FIRE tribe-wannabes run by a former business reporter, is typical in offering newbies lessons on risky investment schemes. Even mainstream media has been encouraging. In September 2021 the national daily Joongang Ilbo began running a series titled "Today I Quit My Job" and opened it with the story of a 41-year-old who quintupled his assets entirely through real estate speculation.
That attitude of approval has been usual during the Covid pandemic. "'I Quit Work as Public Servant': FIRE Tribe Member Who Made 5 Billion Won in Assets with 300 Million Won from Selling First-home", went a feature by the business paper Money Today. "500 Million Won Is Enough For Becoming FIRE", urged Weekly Donga.
The Seoul Economics Daily went straight to the point with this advice from an asset manager: "4 Things the FIRE-dreaming MZ Generation Should Know When Preparing for Retirement".
It illustrates a zeitgeist in the making: that salaried work is mere drudgery, and speculative investment yielding handsome profits is a preferred path to financial security and even happiness. It represents a radical turn away from traditional conceptions of a good life, for better or for worse.
And South Korea is confronting the ill effects of this cultural shift.
The critique of the South Korean system has been building for several years. In the middle of the last decade the parlance Heljoseon 헬조선 (Hell Joseon) went viral among young South Koreans who saw their own nation as a backward land of feudal customs and hellish living conditions (Joseon is the name of the last Korean dynasty that collapsed in 1910).
For outsiders who see South Korea as a modern capitalist democracy, it may sound like an exaggeration, but the comparison to a kingdom run with forced labor (an estimated 40 percent of Joseon's population were slaves) struck a chord in a country where working has meant long work hours, hierarchy, abuse and harassment.
Add to it the enduring corruption at the highest level of society, and personal connections and family background that determine who receives better education and employment. The recipe for disillusionment was firmly in place.
Little wonder that various strategies for coping with this "hellish" reality swept the country. 2017 was dominated by talks of the "YOLO" (you only live once) philosophy, which called for rejecting work-dominated lifestyle of the yore. Some were said to become "digital nomads"—freelancers who can work from anywhere and escape South Korea (or at least decamp to the semi-tropical island of Jeju to the south). Another popular saying went, "Deokeop ilchi 덕업일치": turn your interest into work, and have a fulfilling life. No need to stick with your boring office job. Live your dream.
That ethos coincided with a cryptocurrency boom. Believing that the system offers neither financial security nor social mobility, young South Koreans became famous worldwide for being its early adaptors.
In early 2018 a then-24-year-old employee of mine—herself an investor in virtual currencies—gave an interview to the American public broadcaster Public Radio International (PRI) about the motivation:
"I already realized that my hard work and determination likely won’t translate into job and social security in South Korea. At times cryptocurrency seems like my only life jacket, and I am joined by many other young South Koreans who believe the same."
She said she had put only about 2,500 USD in cryptocurrencies at the time; a few years later our mutual friend told me that she managed to buy a house, apparently with earnings from that investment.
But even as the cryptoboom continued, the YOLO movement withered away during the global pandemic, which was devastating for freelancers and the self-employed.
"Quite some colleagues of mine quit their jobs and took up other occupations like restaurant and cafe owners, travel guides and writers. And so many books about such experiences were published," wrote journalist and writer Lee Jae-ik in his September 2020 column titled "Where Did All Those YOLO People Go?" for the daily Hankyoreh.
"Now? They are all gone. Instead, media reports each day on the collapse of small businesses and freelancers who cannot afford to live without government support."
In 2021 the FIRE trend picked up in earnest where YOLO left young people hanging. Just ten days ago, on Jun. 16, the South Korean Ministry of Finance announced, "YOLO is over! The K-FIRE tribe is here." The government obviously was slow to recognize this new era, but it got one point right: that the previous longing for freelancing and other flexible modes of working has faded, replaced by passion for exponentially increasing one's wealth as quickly as possible. Why bother trying to combine personal interest with work when one doesn't have to work at all?
It's a brute capitalist world presaged and promoted in Robert T. Kiyosaki and Sharon L. Lechter's 1997 financial advice manual and global bestseller Rich Dad Poor Dad. The book was profoundly influential in South Korea, selling 3.5 million copies (out of 32 million allegedly sold worldwide). One famous (or infamous) quote attributed to Kiyosaki is "Job is an acronym for 'just over broke'".
An April 2022 report put the share of South Koreans between 20 and 39 who aspired to join the FIRE tribe only at 6.4 percent, but the figure was so low perhaps because the current market downturn was already in progress. In a survey of the same demographic by the internet job search portal Job Korea in March last year, 41 percent said they were making preparations for early retirement, half of them through stock purchases.
That dream, too, may be in tatters now, and not just for my acquaintance.
The South Korea's main stock market index KOSPI, too, has lost about 25 percent of its value since the peak one year ago, and the technology-focused KOSDAQ index has taken a similar beating in the same period.
Another shock came from the implosion of cryptocurrencies TerraUSD and Luna, created by the South Korean entrepreneur Do Kwon. They became almost entirely worthless by May 12. The decline of Bitcoin followed suit, losing about half of its value since then.
Far more alarming is the state of the country's housing market, which drew complaints only a year ago for the soaring prices but now looks vulnerable to a downturn.
Central banks around the world are raising benchmark interest rates to fight soaring inflation, and the reckoning is near for young people who have taken on too much risk to make quick bucks.
Nearly 30 percent of the apartments sold in South Korea between January 2019 and April 2022 went to buyers under 40, many of whom borrowed heavily for the financing in a phenomenon known as yeongggeul 영끌 ("soul as collateral") or bittu 빚투 ("borrowing to invest"). These young debtors, often over-leveraged and exposed to potentially heavy loses, accounted for 27 percent of the national household debt in the second quarter of 2021, registering the fastest rise among all age groups.
In between, some tragic tales of how this investment fervor went wrong are surfacing. Unbeknownst to me, the top preferred overseas fund among South Koreans was Proshares Ultrapro QQQ (TQQQ), characterized by both high risk and high yield. It's down 68 percent since the year's start. Describing those who took a chance on it without fully knowing what they were doing and now regret the decision, the daily Chosun Ilbo quipped late May, "Those who tried to become FIRE are left only with accounts that have burned down and become ashes."
One office worker told the paper, "I bought TQQQ because a YouTube channel said owning it is like printing money. But now I suffer under the pain of watching my money get wiped out."
Also under scrutiny is the runaway practice of using stocks as collaterals to secure loans from brokerage firms. The money borrowed this way gets pumped into buying yet more stocks, but when the value of the collateral sinks below a certain limit, the lender can take ownership and sell it. The number of such accounts in default at the nation's top three brokerage firms is reportedly 11 times higher now than it was at the beginning of the month.
At last there is a great deal of handwringing in South Korea over whether the FIRE trend should have been allowed to get so out of control. Funnily in an article two weeks ago, the South China Morning Post positively described the goals of South Korea's FIRE movement adherents as seeking "financial freedom in an uncertain world". They want to have control over how much they work, and make choices over how they spend their time.
That's a nice way of looking at it, but the South Korean media sees a darker side to this investment boom: society's growing penchant toward hantangjueui 한탕주의. It's difficult to translate, but stands for "wanting to score a big fortune in one shot". As more young people flock to speculative investment ventures, the idea of and preference for doing honest work is fading.
A 2020 survey, also by Job Korea, asked some 2,000 South Korean adults how one can become rich. 37.5 percent said one had to be born rich, 11.6 argued luck such as winning a lottery was needed, and 11.1 percent gave stocks and investment as the answer. Only 10 percent replied, "by starting with saving small amounts", and 8.4 percent said going into business was the way to go.
Keeping with this picture were three high-profile embezzlement cases between December and February this year. All three involved employees stealing large sums from their companies to buy stocks and cryptocurrencies. "Feeling of responsibility toward one's own work is weakening in the current climate," psychology professor Im Myeong-ho told the Christian paper Kookmin Ilbo in explaining why crimes like them are occurring.
The FIRE proponents have overlooked a fundamental fact: If everyone is fixating on making quick bucks and actively expresses disdain for their job, then who will do any of the work needed in society, and who will take pride in it?
And the obsession with money might as well be called a form of addiction. An expert at the Korea Center on Gambling Problems cautioned last year against the spreading hantangjueui. "Our society considers investment only as a form of financial strategizing. The negative side effects of being too consumed by it are too often overlooked."
Cover: a screen capture of the celebrated scene in the Japanese animation Inuyasha. It's been often used on the Korean-language internet to express the feeling of joy at quitting a hated job. (Source: YouTube)