Capgemini and Merrill Lynch recently released the latest version of their annual World Wealth Report (as discussed in this New York Times article), an analysis of the latest trends affecting the world’s wealthiest people, giving an overview of the state of high net worth individuals worldwide, discussing how they are investing their money, and how they feel about the economy.
We might not all be as wealthy as the participants of the World Wealth Report survey, but perhaps there are some lessons here to see how the world’s wealthiest people are managing their money.
Findings from the World Wealth Report include:
There are more wealthy people than ever before.
In 2010, there were 10.9 million people in the world who had at least $1 million in investable assets, also known as “high net worth individuals” (HNWIs). (The term “investable assets” means that they have $1 million in addition to their homes and belongings.)
If all of these HNWIs lived together in the same country, it would have about the same population as Belgium or Portugal, and would be the 76th largest country in the world. This group of HNWIs grew 8.3 percent from 2009 to 2010. The population of the world is approximately 6.9 billion, so these 10.9 million wealthy people represent 0.15 percent of the world’s population.
The rich are getting richer.
The total amount of wealth owned by the 10.9 million wealthiest people on Earth totaled $42.7 trillion in 2010, up 9.7 percent from the previous year. Since the world’s total household wealth has been estimated at $125 trillion, this means that the world’s wealthiest 0.15 percent own almost 34 percent of the world’s wealth.
[Check Your Credit: Don't Guess. Know.® Get your free credit report and score. No credit card required.
Wealthy people are spending more on “investments of passion.”One of the trends detailed in the World Wealth Report is that HNWIs are spending more on investments that they consider to have a unique emotional appeal. They’re spending money on items and experiences that they love, rather than merely looking for strong investment returns. Even in a slow economy, the market is strong for high-priced works of art, luxury cars, and even soccer teams. (Several high-profile English soccer teams have recently been purchased by wealthy new owners from Russia and the Middle East.)
What are some lessons that the rest of us can take away from these findings and trends? How can we make the financial habits of the world’s wealthiest people work for us?
Keep buying stocks.
The world’s wealthiest people have invested 33 percent of their total assets in equities (stocks), up from 29 percent in the previous year. Many non-wealthy people might be hesitant to invest in the stock market after the downturns of recent years, but the world’s high-net-worth individuals are banking on stocks being a strong long-term investment.
Internationalize your investments.
Another finding from the World Wealth Report is that the world’s wealthiest people are aware of the risks in the global economy. Many are doubtful about the health of the global economy, and are worried that the U.S. government will not be able to balance its budget anytime soon. As a result, many of the world’s wealthiest people are spreading their money around by investing outside of their home countries. You can do this, too.
Buy a broad, diverse blend of international stocks and bonds. This gives you protection against political turmoil, currency devaluation, and keeps you from relying too heavily on the economy of any one country (even if that “one country” happens to be the mighty U.S.). You can usually buy international stocks and bonds as part of your 401(k) plan at work, or as part of an individual retirement account. Check your plan options to see which offerings are available to you.
China (and Asia) are growing fast.
According to the World Wealth Report, China now ranks 4th behind the United States, Japan and Germany for the highest number of high-net-worth individuals. South Korea will join the top 10 list of countries by 2020. There are now more HNWIs in Asia (3.3 million) than in Europe (3.1 million) for the first time ever.
The lesson? Asia’s economic power is likely to continue to grow. Look for ways to invest in Asia’s future growth through international stock and bond funds. If you have kids, you might want to encourage them to study an Asian language. Knowledge of Asian languages and cultures will be a strong asset for anyone who wants to compete in the economy of the future.
Whatever your level of wealth, Quizzle.com can help you manage your money with free tools and resources. With Quizzle, you can improve your credit, lower your monthly mortgage payment and create a more secure foundation to live a richer life.
Related articles:
- Credit Score Battle of the Sexes
- How to Save Money at Albertsons
- How to Buy a Foreclosure Home at Auction
- How to Find Cheap or Free Legal Advice
- Secrets of the 800+ Credit Score Club
Quizzle.com is the easiest way to get a complete understanding of your credit. Visit Quizzle.com to get your free credit report and score. No credit card or social security number necessary!
