How to Become Part of the Top 1% Wealthy: Strategies for Each Decade

Strategies for Building Wealth Across Decades: Tips for Aspiring Millionaires / GettyImageBank

In South Korea, households that belong to the top 1% of wealth are a rare segment, making up only around 1% of the total population. A new report on investment strategies and wealth-building techniques offers valuable insights into what sets these top earners apart. The research emphasizes that self-investment is one of the most effective ways to achieve financial success, and the path to becoming wealthy varies greatly depending on your stage in life.

According to a report by Hanwha Investment & Securities, the definition of a "wealthy person" is subjective, but people commonly accepted as wealthy share a few key characteristics. These individuals are capable of covering their expenses through passive income, and once they have achieved significant wealth, they exhibit self-discipline and avoid excessive greed.

Statistics from the National Statistical Office reveal that only about 1% of households meet the criteria for this category. Specifically, out of the 18,094 households surveyed in the 2023 Financial Welfare Survey, only 194 households had annual asset income exceeding 61.95 million KRW.

When examining wealth by age group, it becomes clear that the likelihood of being considered wealthy increases with age. For instance, just 0.3% of people in their 30s qualify as wealthy, while 0.4% of individuals in their 40s, 1.1% of those in their 50s, and 1.5% of people aged 60 and older fit this category. The report explains that wealth comes from both human capital (education and labor income) and financial capital (savings and investments).

Human capital is built through education in your 20s and serves as the foundation for income generation, while financial capital grows as you accumulate savings and generate passive income. The methods used to convert income into assets change over time. In your early years, diligence is key. As you start accumulating wealth, knowledge becomes a more valuable tool. By the time you have significant assets, time itself becomes the most powerful resource.

In your 30s, you are in a stage of growth. Although you may not yet be wealthy, both income and assets are on an upward trajectory, making this the best time to invest in yourself. Expertise and specialization are intangible assets that provide strong returns in the long term. Top earners in their 30s are typically able to generate enough income to begin accumulating wealth.

Once you reach your 40s, your financial situation generally improves. You likely have substantial earnings, a good amount of assets, and possibly significant debt. At this stage, the focus should shift from cutting down on expenses (which is often no longer an option) to reducing taxes. To achieve financial independence, it is essential to build surplus income that can be invested. Practical experience plays a crucial role, and having an advisory group can help in making wise decisions.

In your 50s, the emphasis shifts toward making time your ally. At this point, your financial assets and non-residential real estate should form the core of your wealth. The primary sources of income in your 50s will come from passive earnings, such as dividends or rental income. For those in this age group, time is an increasingly precious resource. Investment strategies must become more defensive to preserve wealth, and your portfolio should be well-diversified to mitigate risk.

Lastly, it is important to recognize that when you're in your 50s, there is less room to recover from financial losses. The need for cautious investment and strategic asset allocation becomes paramount to securing long-term financial stability. With the right approach, time will work in your favor, allowing your wealth to grow even as you navigate the complexities of aging.

Through careful planning and strategic investments over each life stage, it is possible to rise to the top 1% of wealth.