Which Economies Grow Millionaires?

The number of millionaires in the world rose by nearly 8 percent in 2016 to an all-time high of around 16.5 million people, with record total wealth of $63.5 trillion, according to the World Wealth Report 2017 by Capgemini, a global consultancy firm. They call this report the "industry’s leading benchmark for tracking high net worth individuals (HNWIs), their wealth, and the global and economic conditions that drive change in the Wealth Management industry." The report shows millionaires continue to grow across the three largest geographies: North America, Europe, and Asia-Pacific. The wealth of high net worth individuals (HNWI) -- which Capgemini defines as individuals with investable assets of $1 million or more, excluding the primary residence, collectibles and consumables -- rose 8.2 percent on the year in 2016 and is on track to surpass $100 trillion by 2025 from $63.5 trillion in 2016 (amounts in US dollars).




The report breaks out the number of high net worth individuals (HNWIs) by country as follows:

Source: World Wealth Report (click on graph to enlarge)

The United States, Japan, Germany and China have the highest numbers of HNWI's and together make up slightly more than sixty percent of the total high net worth individuals. The United States has the largest number of HNWI's and saw their share of the total number of individuals rise to 4.8 million in 2016 from 4.46 million individuals in 2015 and 2.46 million individuals in 2008. Bloomberg's Suzanne Woolley reported on the HNWI's willingness to consider using technology companies to help them manage their wealth (please read her entire article to learn more about the Capgemini report):

"Capgemini asked high-net-worth investors how they felt about using services from technology companies such as Google, Amazon.com Inc., Alibaba Group Holding Ltd., Apple Inc. and Facebook Inc. for wealth management. Just over 56 percent said they were open to the idea and cited “efficiency, transparency, innovation and excellent online capabilities” as potential draws. Wealthy individuals are used to interacting with technology and want to take advantage of the same kinds of digital tools and functions when it comes to managing their wealth."

It will be interesting to see how this trend of using financial technology evolves and how the largest wealth managers incorporate artificial intelligence and technology into their product and service offerings. If anyone is wondering when they will reach the million dollar high net worth group one simple chart provides a clue. Below is the million dollar age grid created by personal finance blogger Zach of Four Pillar Freedom:


 Reference: Four Pillar Freedom

Zach shares these observations about the chart:
 

It should be noted, I appreciate the concept of compound interest which makes these numbers work, however anyone who has been investing since 2000 knows that the return from the market is not a consistent 7%. If only investing were that easy. Fortunately regular investing as if you will earn 7% compounded annually from the market is a much better strategy than jumping in and out of the market and missing returns from stocks. The challenge in this scenario is continuing to regularly invest through the ups and downs you will encounter over a 20 or 40 year period of your life. Folks, let's say you want to enter the road to a million dollar portfolio at some point in your life. This is a toll road. If you enter the toll road at age 20 your toll is $4,000 per year, but if you wait until 50 to drive on the road your toll is $50,000 per year. Your older self will appreciate you making the commitment at a younger age.

As always, wise investing my friends.

Please consult a qualified financial advisor before making any investment decisions. This blog is for educational purposes only and does NOT constitute individual investment advice.