Net Worth per Adult Up 67% since 2000: Global Wealth Report

Global wealth has increased by 1.4%, but net worth per adult has remained relatively unchanged in 2016, according to a new Global Wealth Report, by the Credit Suisse Research Institute. The net worth per adult has risen 67% since 2000; however, this growth rate flattened out in the period 2008 to 2016.

Since 2008, any increases in wealth have been driven by those who owned financial assets, but in 2016 for the first time, a larger percentage of the increase in wealth was produced by non-financial assets. But this came at a cost: an increase in household debt.

The Global Wealth Report is issued annually and is one of the foremost sources of intelligence available to gauge global wealth development. It noted that in 2016 global wealth rose by $3.5 Trillion US, to $256 Trillion, and that $4.9 Trillion was added to the value of real assets held, compared to a $330 Billion increase in financial assets.

Meanwhile, the wealthiest 10% owned 89% of all global assets. The US has the greatest number of millionaires in the world: 41% or 13.6 million; Japan is second, UK is third.  Canada is tied with Italy and Australia, each having 3% of the world’s millionaires. In Canada, that’s 1.1 million people, and that number is expected to double in the next five years.

Troubling is the fact that the bottom one-half of adults in the world own less than 1% of total wealth and 9% of adults are net debtors. Half of all adults in the world own assets valued at less than $2,222 US and the bottom 20% owned no more than $248 US. Close to half of the people in the bottom quintile were debtors, with average debt of $2,628 US.

The “bottom billion” live mostly in Africa and India, but even wealthy countries show incidents of extremely low wealth accumulations. The report explains: “In North America, almost all of those in the global bottom quintile have negative wealth. To some extent, this reflects poverty and the relative ease of borrowing, but it also reflects the fact that the valuations of offsetting assets and debts can be treated differently. Taking out a mortgage to buy a house makes little difference to net worth, but consumer borrowing often does not produce an asset whose value would offset the debt in the calculation of net worth. Similarly, student loans help create human capital, but do not produce a balancing asset in the household wealth calculations.”

Increases in household wealth have been related to economic growth, demographic changes and savings rates over the longer term. But, the report explains, over the shorter term, changes in wealth are linked to the movement in asset prices and exchange rates. Noteworthy is the fact that British household wealth dropped by $1.5 Trillion US after Brexit.

The report also describes why measuring wealth is important: it’s an indicator of the ability of households to finance future consumption as well as how adaptable individuals can be when financial obstacles such as unemployment or illness strike.

It correctly concludes that acquiring wealth is less urgent in countries that have public pensions, health care, education, social safety nets, and well-developed business finance, but much more urgent in countries that don’t.  It also points out that low wealth is the result of low income and high debt and is often associated with people who don’t own real estate, are young (under 35), single or poorly educated.

Additional educational resources: New! Elements of Real Wealth Management Course.

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