"Don't sell your house"... Asset management strategy of a couple in their 40s holding 870 million won in US stocks

A couple in their late 40s is contemplating how to dispose of their assets amidst pressure to retire and the burden of child education expenses. Despite owning high-value assets in the metropolitan area, they are expressing anxiety due to the possibility of decreasing income and high fixed expenditures.

Asset status of a couple in their 40s holding a 2 billion won apartment in the metropolitan area and 870 million won in US stocks

According to the Teacher Pil TV - Kim Gyeong-pil's Money Training video, the household income of the couple in their late 40s who sent the story is approximately 7.3 million won per month, with the husband earning 5.2 million won and the wife earning 2.1 million won. This exceeds the median income for a four-person household, which is 6.49 million won. Their asset composition consists of one apartment worth approximately 1.9 to 2 billion won located in the metropolitan area and financial assets of about 870 million won, including direct investments in US stocks.

The apartment is currently being rented out on a jeonse basis; excluding the 800 million won jeonse deposit and 100 million won in loans, the actual net asset is about 1.1 billion won. When adding 320 million won in direct US stock investments, 13 million won in severance pay and retirement pension (DC type), and approximately 107 million won in pension savings funds and ISA accounts, the total net assets reach about 2.5 billion won. Notably, they began investing in US stocks during the difficult period of interest rate hikes in 2022, recording high returns.

Among 6.5 million won in monthly expenses, elementary school academy fees are 2 million won... High fixed costs are the variable

Despite the large scale of their assets, the reason for the couple's significant economic anxiety is high fixed expenditures. Out of a monthly income of 7.3 million won, approximately 6.5 million won is spent every month, including 2 million won for food, 2 million won for children's academy fees (based on two elementary school students), 350,000 won for insurance premiums, 450,000 won for apartment management fees, and 450,000 won for loan interest. As a result, the remaining surplus funds are at the level of 800,000 won per month.

Additionally, the ongoing pressure to retire at the husband's workplace is increasing uncertainty. The husband recently decided to hold on through a departmental transfer, but if he changes jobs in the future, his monthly income could plummet to the level of 3 million won. The requester expressed their dilemma over whether they should sell the house they live in to prepare for the income decrease, or whether they should sell assets from stocks or pension accounts to cover living expenses.

"Selling the house is the last resort... Secure cash flow in order of stocks and pensions"

Expert Kim Gyeong-pil, appearing in the video, diagnosed that "in a situation where they hold 2.5 billion won in net assets, they are excessively worrying about future risks that have not yet occurred." He recommended a step-by-step response by clarifying the priority of asset disposal.

First, selling the residence should be postponed to the very last stage. Kim emphasized that selling the house should be a last resort, stating, "They have not yet retired, and there are ways to liquidate the house through home pensions or reverse mortgages without selling it."

Second is the order of selling financial assets. Kim advised not to touch the funds in pension savings funds and IRP accounts until before the age of 55 to maintain tax benefits. Instead, he suggested prioritizing the use of direct US stock investments that have generated profits. He explained, "If the 4% Rule (a method of withdrawing a certain percentage of assets every year) is applied, about 1.5 to 2 million won per month in living expenses can be procured from the 870 million won in stock assets."

In conclusion, Kim predicted that "it is fully possible to overcome the situation by enduring the decrease in income and responding by gradually selling US stocks to make up for the insufficient living expenses," and suggested that with their current asset scale, there would be no major problems with retirement preparation and raising children.