65% Stocks, 20% Bonds, 12% Gold… Building 700 Million Won in Assets Through Asset Allocation Strategy

A case of achieving economic freedom through an asset allocation strategy by acknowledging future uncertainty has been revealed. According to a Park Gom-hee TV video, a participant working as a local government official stated that they formed approximately 700 million won in assets through asset allocation investment.

"The Future is Unpredictable"... The Philosophical Background for Choosing Asset Allocation

The participant cited 'metacognition' as the foundation of their investment philosophy. They explained that after studying history and witnessing events caused by the interaction of numerous variables, they reached the conclusion that predicting the future is impossible. The participant stated, "Rather than predicting the future, I discovered asset allocation investment from the perspective of preparing for it," revealing that they started investing based on the philosophy that it is more important to prepare an umbrella than to predict rain.

The starting point of the investment was around 2014. At the time, the participant was working as a low-level official in a local area and decided to invest to establish an economic foundation to secure time to spend with their family. In particular, utilizing a 'tax-free overseas fund account' that was scheduled to sunset in 2017 served as the initial driver for asset formation. Although S&P 500 currency-exposed ETFs were unavailable at the time, the participant gradually grew their assets using an ETF portfolio held within the tax-free account. The account at that time included ETFs tracking the China CSI 300 and Japan Nikkei 225, and the participant adopted a strategy of buying one share at a time to prepare for future additional purchases.

Continuing Installment Investment and Portfolio Diversification Even in a Single-Income Situation

After getting married in 2015, the participant purchased an apartment in the 100 million won range, and despite being in a single-income situation due to factors such as the wife's leave of absence for infertility around 2019, they continued steady installment investments. They explained that at the time, there were not many real estate loans and interest rates were low, so there was enough surplus funds to make installment purchases every month when the salary arrived, as the burden of repaying loans was low.

The asset composition became more sophisticated over time. Initially, they started with a portfolio consisting of 80% stocks, 10% bonds, and 10% gold. Later, they expanded the asset classes through learning. While purchasing gold through a physical gold account, they also took a strategy of allocating a portion of the gold weight to purchase small amounts of Bitcoin, considering the correlation between gold and Bitcoin. Additionally, from 2020, they grew their asset scale by actively utilizing tax-saving accounts such as pension savings funds, IRP, and ISA. In particular, regarding the pension savings fund, they began making active contributions to compensate for the fact that they could not reduce the determined tax amount to zero in the past.

For efficient management, the participant built a rebalancing system using Excel. They designed it so that rebalancing occurs based on the number of shares when investing the monthly salary, and by using a method where calculations are performed automatically when current price data is entered, they shortened the time required for monthly investment to about 5 minutes. They stated that through this, they were able to continue investing while maintaining the joys of life rather than being buried in studying.

Adjusting Weights According to Interest Rate Fluctuations... Current Asset Composition Status

Portfolio weights were also adjusted according to changes in the market environment. As interest rates rose sharply and the attractiveness of bonds increased, the participant, having a cash flow in the form of a monthly salary, eliminated the cash holding weight entirely and fixed the weights at 65% stocks, 20% bonds, 12% gold, and 3% Bitcoin.

Within the stock portion, they are allocating half to emerging markets and half to developed markets, and configured it so that the United States accounts for 45% of the developed market portion. The participant emphasized the sustainability of investment, saying, "Rather than studying a lot, enjoying life, cherishing family, and looking long-term is ultimately more beneficial."