Just in case you hadn’t noticed, the rich are getting richer.
According to the latest survey of the world’s wealthy by Merrill Lynch and Capgemini, there are now 192,900 high net worth individuals in Australia, up 11.1% from last year. To get into this rich list you need to have more than $1 million of investable assets – not including your family home, collectible items and super.
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The most startling statistic was our standing in the global wealth rankings. Australia rose one spot in 2010 to have the ninth-highest number of millionaires of the 71 countries covered by the report. We’re now in front of many countries with vastly larger populations than Australia.
Another interesting statistic from the World Wealth Report, was that in 2010, a mere 103,000 people of the nearly seven billion people on the planet controlled 36.1% of the world’s wealth. (This was up from 35.5% in 2009.)
North America had the largest number of so-called ultra high net worth individuals, with 40,000 people worth more than $30 million. By the way, that’s one of the reasons I think the US will eventually work its way through its economic woes. It has more of the world’s high net worth individuals than any other country and there is some smart collective wisdom among these people. They can’t all get it wrong – can they?
But last year was not just a good year for the really wealthy. It was also a good year for the merely rich.
The number of people around the globe with more than $1 million to invest was 10.9 million, up 8.3%, while the amount of money they had, $42.7 trillion, had risen by 9.7%. This was driven largely by the Asian region, including China and, to a lesser extent, Australia.
The report noted that the number of high net worth people in Asia, 3.3 million, surpassed the number in Europe, 3.1 million, for the first time. China ranks fourth behind the United States, Japan and Germany for the number of high net worth citizens.
Advice for everyone else...
This report also offers some practical insight for those of us who are not super rich.
For one thing, the wealthiest people around the world put more money into the equities last year and plan to continue to do so. The percentage of assets allocated to equities increased from 29% to 33%, while allocations to fixed interest dropped from 31% to 29% and cash dropped from 17% to 14%.
Not surprisingly they also invested in real estate. Dorus van den Biezenbos from Capgemini Australia explained: “We see the real estate market as a big contributor to the positive growth number of millionaires in Australia.”
Regardless of what they were investing in, the wealthy were spreading their investments round the world to reduce the risk from political, economic and financial uncertainty. But identifying that safe place is more difficult. The rich generally agreed that they were concerned about the American economy and the potential for political and economic unrest elsewhere.
Not surprisingly the World Wealth Report found that wealthy Asians were the only ones confident in investing in their own region. The report estimated that Asians would maintain the current percentage of their money invested in the region in 2012, while the wealthy in Europe, North America and Latin America indicated that they planned to reduce their allocations to their own regions.
With the rich getting richer yet many of us feeling poorer, knowing how the very rich think about their investments and diversification in an uncertain world can be useful to everyone else. Or it could provide some interesting gossip to share with friends.
Michael Yardney is the director of Metropole Property Investment Strategists , a best-selling author and one of Australia’s leading experts in wealth creation through property. He also writes the Property Investment Update blog.