Investing May 14, 2001

The Rising Ranks of Rich

May 14, 2001 (PLANSPONSOR.com) - America continued to assert itself in the ranking of the worlds' wealthiest, no doubt helped along by burgeoning 401(k) investments and stock options, according to this year's World Wealth Report.

Reported by

Camilla Klein

The report, published by Merrill Lynch and Cap Gemini Ernst & Young, found a 6% increase in the wealth of high net worth individuals globally to US$27 trillion last year despite flagging global equity markets.

Rich Get Richer

Some 180,000 people joined the ranks of the high net worth individuals (HNWI), or those with more than $1 million in investable assets, excluding real estate, bringing the total of high net worth individuals to 7.2 million people, up 2.9% from the previous year.

The wealth of ultra high-net worth individuals (UHNWI), who have investable assets of more than $30 million, increased 6% to $8.37 trillion. The number of people in this group rose 3% to an estimated 57,000 people.

The first quarter of last year saw strong growth in the creation of HNWIs continued, with an additional 260,000 millionaires created by the end of March 2000. However, as the major indices began to slide, the number of new millionaires fell by over a third in the remaining three quarters of 2000.

The report forecasts growth of 8% annually, in the HNWI group over the next five years, reaching US$39.7 trillion in 2005.

North America

More than a third, or 35% of the world’s HNWIs reside in the US or Canada. Their ranks swelled by 2.4%, reaching 2.54 million individuals in 2000, while the value of their combined wealth increased by 9% to $8.8 trillion despite the fall in the equity market.

The increase in wealth can be attributed to:

corporate profits distributed in the form of bonuses early in 2000
with generous stock option packages, and
strong growth in Gross Domestic Product.

The North American market share of the world’s HNWI’s wealth accounts for 32.7% of the global group’s wealth. It has grown 313% in the last 25 years, and is forecast to grow a further 48% to $13 trillion by the end of 2005.

There was an almost 3% rise in the number of Canadian HNWIs to an estimated 177,000 people at the close of 2000, largely due to the 4.2% increase in the value of the Canadian stock market last year, the fourth best performing market in the world last year.