“Itaewon Class, a series beloved by many because of its business, growth, and investment elements, stood on top of the concept of insurance.” — Ian Dilla
Life Insurance and Investment
This is your weekly dose of personal finance 101. Let’s deep dive to better digest the key happenings in the series. I won’t be surprised if there would be a surge of new stock traders and investors after watching Lee Ho-Jin (DanBam’s Asset Manager) in action. Ho-Jin ended up being a talented financial manager loyal to Saeroyi’s cause. We all witnessed how cunning Saeroyi was when he invested his late dad’s insurance money into the stock market with the help of Ho-Jin. And not just any other stock, he timed it right when Jangga Co.’s stock value dived due to bad publicity by Geun-won. We have two key concepts of Personal Finance to explore right here, the concept of life insurance and investing.
Life insurance is a contract that guarantees payment of a death benefit in the form of money to a named beneficiary when the contract holder dies (Investopedia). The beneficiary, in this case, is Saeroyi while the contract holder was his late dad, Mr. Park. Simply put, if it weren’t for the life insurance of Saeroyi’s dad, the goal of overtaking Jangga would be far more daunting (but not impossible). The insurance money allowed Saeroyi a fresh start and a chance to redeem himself. On the flip side, if his dad did not avail of life insurance, Saeroyi would’ve have started from scratch. If you are a breadwinner, like Mr. Park, or you have dependents, life insurance is a must.
If you are a breadwinner, like Mr. Park, or you have dependents, life insurance is a must.
Investing, on the other hand, is the act of allocating resources, usually money, with the expectation of generating an income or profit (Investopedia). Investing only comes after you have life insurance, an emergency fund, and consistent savings. Saeroyi decided to invest his insurance money on the stock market, in particular Jangga Co. He did it for two reasons: market timing and fundamental analysis.
The stock market displays the value of a company or business throughout a time spread. The value of the company rises and drops depending on how people buy or sell the company’s stock. Saeroyi timed his entry of buying Jangga Co.s stock when the value was low, due to Geun-Won’s drinking stunt which drove the stock down. This is an example of market timing, you buy when the stock value is low and you sell when it goes high. It’s a type of investment or trading strategy.
Why did he buy Jangga though? What if Jangga would continue to crash into lower values? Saeroyi believed that Jangga won’t be out of business purely because of Geun-Won’s bad publicity. Saeroyi knew that Jangga was a fundamentally good company, it’s great food and great service did not change due to the events. This is general fundamental analysis, it is the method of learning the stock’s real or intrinsic value. Jangga’s real value did not change, only the stock value. You should invest in companies that are fundamentally sound.
Remember that moment when the local investors were mad at IC Corp. when the major investor withdrew? Saeroyi simply responded that their investment wasn’t for naught. He reminded them that they invested after tasting DanBam’s food. DanBam’s food and service never changed despite the major investment withdrawal. DanBam is still fundamentally sound so they should calm it down a notch. Recall the Plan B this time? “I’ll take out a mortgage loan”, now that’s some resolve.
Where Money Stands in a Business
The most important things in business are people and trust. I will value people more than money.
If you wish to know where the value of money stands in a business, it comes after the value of people and trust. For the protagonist, running a business plainly for the profit is never a worthwhile endeavor. “The most important things in business are people and trust. I will value people more than money”, Saeroyi said upon finally acquiring Jangga Co.
Guanxi means relationship, remember this scene? A case for the value of people was when Team DanBam resurfaced after the time skip as directors of IC Inc. The board was discussing whether to invest in a new partner since the current partner, Masa Distribution, was performing poorly and was tagged as a dying company. This was completely akin to to Hyun Yi’s situation. The other members of the board recommended the more profitable option but Team DanBam quickly reminded them of the philosophy of IC Co: the importance of people and trust. To trust a partner is to support it — in good times and in downtimes.
If there is one takeaway I want you to carry it is this: the value of money comes only after the value of people and trust regardless of any endeavor you are partaking. If it isn’t for the greater good of others, then it’s never a worthwhile endeavor.
If it isn’t for the greater good of others, then it’s never a worthwhile endeavor.