Tuesday, 02 June 2015 - 20:00

 

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Seed Weekly - Global Wealth

From a purely financial perspective, the ultimate goal of all investors should be to become a rentier. With French origins, the definition of a rentier is “a person who lives on income from property or securities”.

As investment managers and advisors we look to assist clients to reach this goal of having ones accumulated investment assets deliver an adequate and inflation proofed income on which to live. With proper planning, a high degree of diligence and careful management it is definitely an attainable goal for many people.

But this is also put into perspective when looking at global statistics. There is a high degree of inequality in global wealth and the reality is that for the majority of the world’s population, their required income throughout their lifetime will come as a result of labour and not from income from accumulated savings.

Across the world there is an estimated global wealth of approximately $263 trillion according to the last Credit Suisse Global Wealth Databook. This is a detailed annual report on the distribution of global wealth across countries. Global wealth has increased dramatically from $117tn in 2000 to the estimated $263tn in 2014. It is estimated to grow to $369tn by 2019.

Their analysis extrapolates sample data across the major countries. The detailed data is summarised into a wealth pyramid below. This places adults into one of four wealth bands. Under $10 000, between $10 000 and $100 000, between $100 000 and $1m and then over $1m. The results are telling in the extent of how extreme the inequality is.

Global Wealth Pyramid

Source: Credit Suisse

According to Credit Suisse, in order to be among the wealthiest half in the world, one needs a net USD 3,650 in assets. But to be in the top ten percent of global wealth holders, a person needs at least USD 77,000 in assets. Taking it up to the next level, according to Credit Suisse in order to make it into the top 1%, a person needs a net wealth of $798 000.

Looking at it from another angle, half of the global population own less than 1% of total wealth. In contrast the top percentile own 48% of global assets. A 2014 report from Oxfam painted the picture that the richest 85 people in the world share a combined GBP1tn, as much as the poorest 3,5 billion of the world’s population.

Another web site where one can insert income or wealth details and get a view of your ranking in global terms is www.globalrichlist.com, which is sponsored by Care International. Insert your total wealth or annual income and get a good understanding of your ranking on the global scale of wealth.

These reports and statistics will put your financial position into context. For many it should also be the needed catalyst to commence a plan towards becoming financially free and for some it may trigger plans to look for ways to reduce wealth inequality.

Kind regards

Ian de Lange

Tel 021 914 4966
Fax 021 914 4912
Email info@seedinvestments.co.za

www.seedinvestments

Tue, 02 Jun 2015

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