Money lessons from K-drama

One of my hobbies when there are long breaks is watching K-drama.

Although I watch these shows mainly for entertainment, some shows have important money lessons that are worth sharing given their relevance to Filipinos.

Invest your windfall gains. What will you do if you receive a huge windfall gain, like a big inheritance, large insurance proceeds, or win the lottery? If you follow your instincts, you will most likely buy nice and expensive things like designer goods, jewelry, a luxury car or a big house. After all, owning these things will make you feel good, allowing you to brag about your better standing in life.

While there is nothing wrong with buying nice things, remember that most of these things lose value over time. If all you do with your windfall gain is buy stuff that become cheaper over time, then everything you own will eventually become worthless, and your financial situation will return to where it was before you got your windfall.

Aside from paying off your debts, prioritize investing when you get a windfall gain as this will jump start the growth of your financial resources, benefiting you in the future, when it matters the most.

In K-drama Itaewon Class, lead character Park Sae-Ro-yi invested the insurance money he received upon his father’s death in the stock market. This decision eventually paid off. Even though he was imprisoned for several years and did not have much income, the significant growth in the value of his investments allowed him to buy a building when his much richer enemy, the chairman of Jangga Co., tried to make him fail by buying the property where his successful pub DanBam was located.

Crisis

Buy stocks when there is a crisis. One of the reasons for the significant increase in the value of Park Sae-Ro-yi’s investment in Itaewon Class was his move to buy shares of well-run Jangga Co. eight years earlier when it was sold down because of a scandal involving the chairman’s son, GeunWon. Although the company’s image was tarnished, SaeRoyi said he still bought the stock because “its core values were the same.” This was the reason why Jangga’s share price bounced back over the long term, allowing Sae-Ro-yi to earn a handsome profit.

Asset prices (including stocks) only become cheap when there is a crisis. This is why I believe now is a good time to buy stocks, especially if you have money that you can keep for the long term. As I have said many times before, a lot of companies in the Philippine Stock Exchange are now trading at very cheap valuations, with some even trading below the net book value of their assets. Although nobody knows when the COVID-19 pandemic will end, it won’t last forever. When conditions normalize, stocks of well-run companies will no longer be cheap and investors who were brave enough to buy stocks today will be richly rewarded.

Working for someone can be more lucrative than starting a business. Many Filipinos dream of starting a business, especially if they are smart or talented because they want the prestige of owning a business and believe that they will earn more compared to just working for somebody else.

However, being smart or talented doesn’t automatically guarantee success in business. Starting a business also requires a lot of responsibilities that you might not be willing to take. It is also normal for businesses to lose money in the beginning and if your pockets aren’t deep enough, you could run out of capital before your business becomes profitable. Because of this, you might sometimes be better off working for a big company that already has the infrastructure that will allow you to maximize the value of your skills and will pay you well for helping the company grow.

When one of the programmers in the K-drama Start-up Kim Yong-san asked successful venture capitalist Han Ji-pyeong if their team should accept an offer to work for Cheong Myeong’s company instead of putting up their own firm, Mr. Han said that “if what excites you is writing programs and seeing them run, work for a company that pays you well. If you’re excited about establishing and leading a company, then run your own company.”

Risk management is very important. Having a good education and access to capital improve the likelihood of successful. This is why people think graduates from top universities belonging to well-to-do families have an upper hand. However, risk management is equally important. After all, access to capital is a double-edged sword that can cause someone to lose a lot of money. Many rich people become poor because of risky investments that have turned sour.

In the K-drama Squid Game, Cho Sang-woo (player 218) was not the type of person you would expect to join the games. After all, he was part of the “most likely to succeed” list, graduating at the top of his class from Seoul National University. He also had a good job, working as a supervisor in an investing company. However, because of bad investments in highly risky derivative products, he ended up with a debt of 6 billion won ($5 million) and was being hunted by the police for embezzlement, forgery of private documents and other financial crimes.

If Sang-woo managed his risk better by making smaller bets and cutting his losses early, he would not have lost such a big amount. He probably also would not have to cheat his customers in desperation to recover his losses.

The best gift you can give to your children is to take care of yourself. Because we love our children, we do our best to provide them the best of everything. For example, we enroll them in the best schools we can afford and buy them the latest high-end cellular phones and laptops. Sometimes, we do this to the point of sacrificing our own needs such as delaying important medical procedures, not buying insurance or investing for retirement.

Many of us hope that when we grow old, the investments we made in our children will pay off, allowing them to work in high-paying jobs or become successful entrepreneurs. Once this happens, we hope that our children will pay us back by taking care of us.

Unfortunately, this mindset could set us up for disappointment. Even if our children do well, it doesn’t mean that they will take care of us because they will also have their own bills to pay and families to take care of. In fact, if we keep on asking them for favors, they might think that we are a burden and try to avoid us instead.

In the K-drama Home Town Cha-Cha-Cha, 80-year-old Kim Gam-ri needed to get dental implants because she couldn’t eat a lot of food without pain. However, she initially didn’t want to push through with the procedure because it was too expensive.

When the dentist Yoon Hye-jin asked her if cost was the issue, she bragged that she has a son working as an accountant in Seoul, and that she has a granddaughter studying in Harvard University in America. However, when she called her son to ask for help, he couldn’t help her because he had to prioritize his daughter’s tuition, which is very expensive.

When lead character Hong Du-sik said that he would just pay for the procedure because Kim Gam-ri has been selfless all her life to the point of not being able to take care of herself, Dr. Yoon responded by saying that Ms. Gam-ri was selfish because being a good parent means doing what it takes to stay healthy for a long time. INQ