Thursday , 29 February 2024

How the Wealth of Canadians, Americans, Brits and Aussies Compare

Countries differ greatly in the levels and pattern of wealth holdings…In this article…we highlight those of Canada, the United States, the United Kingdom and Australia. [Take a look at the results of our extensive research.] Words: 1314

So says the Credit Suisse Research Insitute’s “Global Wealth Report 2011” (see here*) which Lorimer Wilson, editor of (Your Key to Making Money!), presents below in part. The authors’ views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

While this article dwells only on the wealth of 4 countries the full 56 page report provides the same for 11 other countries ((Japan, China, India, France, Switzerland, Czech Republic, Singapore, Taiwan, Indonesia, South Africa and Chile) plus major insights into 20 other areas of wealth, namely:

  1. the number of high worth individuals in the world
  2. the average annual wealth growth rate
  3. the annual wealth growth rate by country
  4. the aggregate global wealth growth rate
  5. world wealth levels by country
  6. the share of world wealth by region
  7. global trends in wealth per adult
  8. the regional composition of global wealth distribution
  9. the owners of wealth above USD100,000 by country of residence
  10. dollar millionaires by country of residence
  11. high net worth individuals by region
  12. ultra high net worth individuals by country
  13. household income to household wealth by G7 countries
  14. household debt to household income in G7 countries
  15. household net financial wealth to household income in G7 countries
  16. household net real assets to household income in G7 countries
  17. net worth as multiple of disposable income
  18. ratio of financial assets to non-financial assets
  19. wealth and age
  20. prospects for personal wealth in 2011

Regarding the wealth of  Canadians, Americans, Brits  and Australians the report goes on to say:

Canada – Wealth is on the Rise

Despite its relatively small population, Canada ranks 8th in the world in terms of aggregate household wealth and 13th in wealth per adult. Its current wealth level, at $245,000 [all further dollar references will by in USD], is very close to the $248,000 figure for the United States, reflecting considerable convergence since the year 2000, when mean wealth in Canada was only 56% of that in the United States in USD terms.

Measured in terms of US dollars, mean household wealth grew at an annual rate of 7.7% from 2000 to mid-2011. When exchange-rate changes are excluded, the rise in wealth is more modest, showing annual growth of 3.6%. Also, the contraction in household wealth due to the financial crisis – almost 30% in US dollar terms – is much less evident when wealth is expressed in Canadian dollars. While wealth per adult in the United States is still 8% below the 2007 level, Canada’s wealth in domestic currency is now 3% above the 2007 figure. This reflects the fact that Canada’s financial institutions and housing market did not suffer a collapse during the global financial crisis.

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Canada is similar to the United States in having more than half of its household wealth in financial assets, although the fraction of assets in financial form, at 56% is less than in the United States, where they make up 68% of total assets. The wealth distribution is more equal than that of the United States, as reflected in the much higher median wealth – $89,000 versus $53,000 in the United States. Canada has both a smaller fraction with wealth less than $1,000 and a larger percentage with wealth over $100,000 than the United States. It has almost 1,000,000 millionaires, and contributes 4% of the global top 1% despite having only 0.5% of the world’s population.

United States – A Land of Fortunes

The United States has seen fluctuating wealth levels since the year 2000. Average wealth was close to $200,000 at the turn of the century and rose fairly steadily until 2006, before falling as a result of the financial crisis. There has subsequently been a recovery, but wealth per adult remains below the 2006 level. It is yet to be seen whether recovery will continue or if the wealth level in the United States will decline again in the face of slower growth or a “double-dip” recession.

The United States is unusual in having a very high proportion of assets (68%) held in financial form, partly because it has a larger number of active shareholders than other countries. Also, compared with many other OECD countries, the United States has more economic activity in the private rather than public sector, and more outward foreign investment – both of which rely partly on financing by households through their ownership of bonds, stocks and other financial instruments. Debts of $59,000 per adult are not extreme by international standards.

Compared to the wealth distribution in the rest of the world, the US distribution has a high proportion of the population with wealth above $100,000. The fraction with wealth at higher levels is even more disproportionate. The United States has by far the greatest number of members of the top 1% global wealth group, accounting for 41% of those with wealth exceeding $10 million and 32% of the world’s billionaires. The number of ultra high net worth individuals with wealth above $50 million is six times that of the next country (China).

United Kingdom – An Uncertain Outlook

The construction of personal sector balance sheets was pioneered in the United Kingdom, which also developed the methods of estimating household wealth from estate tax records. As a consequence, the United Kingdom has data on wealth holdings which date back more than a century. These data capture the trends in personal wealth during the course of the 20th century, most especially the substantial drop in wealth concentration between 1900 and 1970 that has been attributed to the effects of the two world wars, taxation, more equal division of estates on death, and the spread of popular assets like consumer durables and owner-occupied housing. In the last few decades, wealth has grown more quickly and wealth inequality has increased moderately.

The past decade has been one of considerable fluctuations in average wealth fuelled by a booming housing market up to the year 2007 and a subsequent fall in both real property and financial assets. Expressed in terms of US dollars, wealth per adult in 2011 is above that in the year 2000, but remains far below the peak of $320,000 in 2007. Much of the fluctuation is attributable to exchange-rate movements: expressed in terms of UK pounds, the series is more stable but average wealth declined slightly in 2011 and remains below the 2007 figure. Real assets now make up 51% of household assets, while debts account for 17%.

Relatively few people are recorded as having wealth below $10,000, while over half the population has wealth exceeding $100,000. The UK counts 2.8 million people in the top 1% of the world wealth distribution, and 1.6 million millionaires.

Australia – Stellar Performance

Australia has experienced robust growth since the turn of the century, with wealth per adult quadrupling over the past decade. This was due in part to the appreciation of the Australian dollar, but wealth has doubled even when this is taken into account. In 2011, average wealth in Australia, at $397,000, was second highest in the world – after Switzerland and ahead of Norway. More surprisingly, perhaps, its median wealth of $222,000 is the highest in the world.

A noticeable feature is the composition of wealth, which is heavily skewed towards real assets, which amount on average to $323,000 and form 65% of total household assets. In fact, the level of real assets per adult in Australia is now the second highest in the world, after Norway. In part, this reflects a sparsely populated country with a large endowment of land and natural resources, but it also is affected by high urban real estate prices.

Compared to the rest of the world, very few Australians have net worth less than $1,000. This reflects such factors as relatively low credit card and student loan debt. The proportion of those with wealth above $100,000 is the highest of any country – eight times the world average. With 1,861,000 people in the global top 1%, Australia accounts for 4.1% of the members of that wealthy group, despite having just 0.4% of the world’s adult population.

 * (Canada: page 52; U.S.: page 38; U.K.: page 43; Australia: page 49)