Wednesday, March 6, 2024

Are You in This Group of People?

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AN OXFORD CLUB PUBLICATION

Liberty Through Wealth

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EDITOR'S NOTE

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THE SHORTEST WAY TO A RICH LIFE

Are You Part of the Global 1%?

Matt Benjamin, Senior Markets Expert, The Oxford Club

Matt Benjamin

What does it take to be part of the global 1%?

In terms of wealth, of course, it differs considerably from country to country of course, and the threshold is very high in a handful of rich countries.

That's according to Knight Frank - a London-based real estate consulting firm - which published the 2024 edition of its well-respected Wealth Report today, an annual research report on global wealth trends of the previous year.

(You can find the entire report here).

As is the case with every year's Wealth Report, this year's edition is full of fascinating information about where the world's wealthiest people live, and what they do, think and invest in.

But first, what is the threshold for joining the top 1% in nations around the world?

Having wealth of just over $1 million puts you in the top 1% in China (the mainland, not including Hong Kong). But you need about $12.8 million to join this elite club in Monaco, which tops the list. (These figures are as of the fourth quarter of 2023.)

And in the United States? Your wealth needs to be a bit more than $5.8 million to be in the 1%.

Here's the breakdown of the net wealth needed to join the top 1% in selected countries and territories, as of the end of 2023…

The 1% Club Around the Globe
 

As the report states, "European hubs top the list" and smaller hubs have higher thresholds.

Small indeed. Keep in mind that the area of Monaco is 514 acres, so it can fit inside New York City's Central Park. And at 998 square miles in land area, Luxembourg is about 82% of the size of Rhode Island, the smallest U.S. state.

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The Super Rich

But there's an even more elite club you can join. Knight Frank calls it UHNWI, or ultra-high-net-worth individuals. These are people with a net worth of $30 million or more.

This global group of super-rich individuals expanded 4.2% last year, to almost 627,000 (from just over 601,000 the year before).

Regionally, the UHNWI group grew 7.2% in North America and 6.2% in the Middle East last year. North America led the way due to the rapid US economic recovery after the COVID pandemic.

What was behind all the newly minted super rich last year? Knight Frank found it was primarily surging stock markets across the globe. Not surprising. The S&P Global 100 - which tracks the performance of 100 multinational companies - was up more than 25% in 2023. Bonds and real estate also played a part, as did increases in the prices of gold and Bitcoin.

This 2023 increase in UHNWIs more than reversed a small decline in 2022, which was due to the terrible global investing environment that year.

Alternative Investments

So, where do the super wealthy put their money? Well, as the report states, they tend to become wealthy through stocks and, to a lesser extent, bonds and real estate.

But the UHNWI group also allocates about 20% of its wealth to what the report calls "investments of passion." These are luxury and collectible items that the super wealthy buy for both enjoyment and returns.

The most popular luxury investment category in 2023 was art, followed by classic cars. Here's the list of the top 10, ranked by how popular they were last year.

Most Popular Investments of Passion
 

The super wealthy invest in these types of objects principally for the joy of ownership, according to the survey in the report. Other reasons include a desire for returns, status seeking, the desire to belong to a community, and intellectual interest, in that order.

Interestingly, art was also the best performing luxury asset class last year, with prices up 11% from the year before.

The Millionaires Club

Finally, there's more good news just a bit further down the wealth scale.

Last week, Fidelity - which is one of the largest managers of retirement accounts - said the number of people with $1 million or more in their 401k accounts jumped 20% in the fourth quarter and now stands at 422,000. That's near a record high.

So, what does a person have to do to join the swelling ranks of the 1% club, or even just the millionaire retirement account club?

Invest wisely.

Matt

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