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Fred Dunkley

Fred Dunkley

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Fred Dunkley is a tech analyst, writer, and seasoned investor. Fred has years of experience covering global markets and geopolitics. 

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The New Ultra-Wealthy Benchmark Is $50 Million

Cash

Millionaires are pretty much just regular upper middle class folk these days. After all, when there are 16 million of them, they get lost in a sea of ordinariness. They aren’t ultra-wealthy at all. If you want ultra-wealthy, you have to have at least $50 million to make the grade. Better yet, bump it up to billionaire.  

According to “The Wealth Report” by Knight Frank, the world now boasts $129,730 individuals with a net worth of $50 million or more as of 2017—and a total worth of $26.4 trillion.

North America is home to the biggest portion at 44,000, followed by Asia with 35,880 and Europe close behind with 35,180.

(Click to enlarge)

And these numbers reflect a 10-percent increase over 2016. It’s a significant increase when you consider that over the previous five years there was only a cumulative 18-percent increase, while in 2015, the ultra-wealthy population figures actually declined.

Indeed, Knight Frank speaks of an “auspicious time for wealth creation”.

“We have been experiencing ‘Goldilocks’ economic conditions: not too hot, and not too cold. These make it easier to do business, provide a good environment to raise capital and, above all, encourage entrepreneurialism – the key to wealth creation,” says Vincent White, managing director at the Wealth-X Institution, as interviewed by Knight Frank.

That’s why the new millionaire has to have $50 million or more in net worth and assets, while the next tier up is the “demi-billionaire” with over $500 million. Even multi-millionaires—those with $5 million or more—barely rank these days.

So why the sudden, rapid uptick in the ultra-wealthy population?

According to Knight Frank and Wealth-X, in part, it’s the “growing momentum of the global economy since the start of 2017”.

While the relationship is not linear, the report says, “many currencies gained strength against the US dollar last year, which has resulted in a net increase in our estimates […] There is an interplay between this and other factors affecting wealth growth”.

Of course, those estimates came before the emerging markets crisis the world has found itself in today, where the US dollar is the only game in town and a handful of countries are experiencing a severe currency crisis that has some talking of a repeat of 2008.

Fiscal policy changes are also on Wealth-X’s impact list, “although it can take some time for the changes to be felt”.

But back to 2017 …

While North America’s ultra-wealthy population increase by 5 percent last year, the biggest gains were in Asia, where the $50-billion-or-more population rose by 15 percent, bumping Europe out of the second-place spot. The ultra-wealthy population in Europe grew its ranks by 10 percent.

China is the biggest story here, and over the next five years, Wealth-X says the ultra-wealthy population will more than double here. And across Asia, things are looking pretty good. Japan is expected to see its ultra-wealthy ranks increase by over 50 percent, while India is expected to see an increase of over 70 percent, with Indonesia and Malaysia close behind.

We have revised up our economic outlook for the region owing to a rosier Chinese growth forecast in the short term. Steady demand from final consumer markets and rising commodity prices will support exporting countries in the region, while expectations of a very gradual monetary tightening will underpin growth overall,” Frank Knight cited Economist Intelligence Unit analyst Agathe L’Homme as saying.

And despite the present economic and geopolitical headwinds, White still expects 2018 to be a good one, with continued growth of the ultra-wealthy population in the medium term. “Even when conditions are negative, we have traditionally seen more resilience among ultra-wealthy populations,” he wrote.

By Fred Dunkley for Safehaven.com

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