How much wealth does the world have? - August 21, 2019

How much wealth does the world have?

We often write about changes of the stock market, the most valuable companies, or the richest of the world. There’s another interesting, yet less analyzed aspect of the economy: household wealth, or to put it simple, how much money do individual people have. Luckily, a new study tells us: $317 trillion. Let’s see the details, too!

According to Credit Suisse’s Global Wealth Report, total household wealth grew by approximately 4.6% in 2018, adding up to a total of $317 trillion. This growth was a bit lower than last year, but still “higher than the average growth rate in the post-2008 era”.

The study has other interesting bits, like how the average wealth per adult was $63,100. This is a tricky figure, though. Not all countries are created equal as there are huge differences between them.

The wealthiest countries

The richest countries have breathtaking average wealth per person. Switzerland for example is almost 10 times above the average global wealth with its $530 thousand wealth per adult. Australia comes in as second and the USA as third.

Click on the image to see it in full resolution

To put this in perspective: any country under the 34th spot (United Arab Emirates) has less than the average wealth. That means 106 countries have less than $63,100 per adult, and the top 34 countries “balance” that out.

There are huge wealth gaps

This wealth inequality can be seen within country borders, too. We can see that if we look at the median wealth per adult. This measure means that half of the country’s population is above that wealth and half of it is below. Why is that important? Because it shows how big is the wealth gap between the people in those countries.

Click on the image to see it in full resolution

Although there are several similarities between the two charts, there are important differences too. Most of all, the USA is only at the 21st place in median wealth, meaning that there are serious wealth gaps in the country. That is a long going debate in the country and is expected to turn out as an important topic in the 2020 presidential elections.

Region matters, too

It might seem obvious, but data confirms it too: the region of a country matters a lot when we’re talking about its household wealth. Our chart below shows that North America and Europe have a strong lead over the others. But it’s important to underline that China and India were excluded from the Asia Pacific region. If they were included, they could have taken over all the other regions.

Click on the image to see it in full resolution

Latin America and Africa however are lagging behind the others. To make things worse for Latin America, it is the only region whose wealth decreased. It wasn’t small either: they endured a 4.9% loss in wealth. Every other region managed to grow.

What to expect?

It’s hard to say, but the study came up with some interesting results. One of them is that in 2018 “the United States added 878,000 new millionaires – representing around 40% of the global increase”. France, Germany, the UK, and Italy also had a strong year. In addition, the paper points out that “China is now clearly established in second place in the world wealth hierarchy”. This race between the nation might go on in the future. What’s also important to see is that global wealth will grow. As Credit Suisse put it: household wealth is expected to go up to $399 trillion by the year 2023.

We can just hope that this wealth will find its way to the investment world, hopefully in a safe and well-balanced way.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.