More than a million people join ranks of very wealthy after stock markets boom

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More than 1 million people entered the global ranks of the wealthy last year as booming stock markets increased the number of individuals with free assets of more than $1m (£750m) to a record 16.5 million.

Research by the business consultancy Capgemini found that the world’s high net worth individuals (HNWI) collectively hold a $63.5tn fortune. In order to qualify as an HNWI, a person’s assets – excluding their primary residence and its contents – must be worth at least $1m.

More than 1.1 million people saw their cash fortunes tip them into the HNWI bracket over 2016 as investments in shares in US and European markets performed well. The ranks of HNWIs grew by 8.2% in 2016, up from 6.5% annualised growth over the previous five years.

Cliff Evans, one of Capgemini’s researchers, said the report showed that the already-rich were getting richer at a much faster rate than the wider population. “For people with a lot of money the service they’re getting from investment managers is proving its worth,” he said. “If you can afford the advice you get a much greater return.”

The report found that HNWIs earned average returns of 24.3% on their portfolios that were overseen by a wealth manager in 2016. This compares with average interest rates of just 0.35% offered by instant-access high street bank accounts, according to the Bank of England.

In 2016 there were 16.5 million high net worth individuals worth a combined $63.5tn

It comes as a growing number of politicians, economists and even the super-wealthy themselves are speaking out about the dangers of growing inequality across the world.

Four International Monetary Fund (IMF) economists warned that inequality “can fray social cohesion and undermine the sustainability of growth itself”.

“Inequality has risen in several advanced economies and remains stubbornly high in many that are still developing,” they said. “This worries policymakers everywhere for good reason. Research at the IMF and elsewhere makes it clear that persistent lack of inclusion – defined as broadly shared benefits and opportunities for economic growth – can fray social cohesion and undermine the sustainability of growth itself.”

Ray Dalio, the multibillionaire founder of the world’s biggest hedge fund, Bridgewater Associates, said this week that inequality was the globe’s biggest problem.

“I think the greatest issue of our time is the disparity of wealth and the problems that exist for the lower 40% of the population,” he said. “If you carve out that lower 40%, not only has there been no income growth, but death rates are rising because of opiate use, suicide, and because they’re losing jobs.

“This is the biggest issue of our time – the biggest economic issue, the biggest political issue, and the biggest social issue.”

The Capgemini report said there are now 14.9 million “millionaires next door” – Capgemini’s term for those with investable assets of between $1m and $5m. This group grew by 7.4% in 2016.

The US, Japan and Germany account for more than half of the world's high net worth individuals

The rate at which rich people tipped over the threshold to become ultra high net worth individuals – people with investable assets of more than $30m – grew at 8.3%. This was more than double the increase in 2015 and there are now 157,200 people in the ultra-HNWI bracket, according to the survey. These people collectively hold $22tn of assets – almost 10 times the UK’s gross domestic product.

“Ultra-HNWIs, with $30m or more in investable assets, posted striking improvements in wealth and population, thanks in part to an upswing in Latin American economic performance,” the report said. “Because Latin America accounts for more ultra-HNWI wealth than any other region, it holds significant sway over the segment’s overall growth.”

Vibrant growth in Latin America helped lift global ultra-HNWI wealth by 9.2%, up from an increase of 2.5% in 2015.

The UK dropped out of the world’s top five countries that HNWIs call home, with France pushing Britain into sixth place. The UK fell down due to the drop in the value of sterling after Brexit, and France’s tally was boosted by from share price growth.

There were 568,000 HNWIs in the UK, up slightly 553,000 in 2015. In France the number grew from 523,000 to 579,000.

By far the most wealthy people are in the US, where the HNWI ranks grew by 8% to 4.8 million. Japan comes in second with 2.9 million, followed by Germany (1.3 million) and China (1.1 million).

Powered by Guardian.co.ukThis article was written by Rupert Neate Wealth correspondent, for The Guardian on Thursday 28th September 2017 04.30 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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