According to a study released earlier this month from the Boston Consulting Group (BCG), the world’s millionaires and billionaires now own a record 45% of all global wealth – and their share is growing. Yet they make up only about 1% of the world’s population.
The report from the global consulting firm found that the world’s millionaires own over $75 trillion (45%) of the $167 trillion in personal wealth in the world, up from 44% in 2015. The BCG projects that by 2021, the world’s millionaires will control $115 trillion or 51% of global wealth.
If I asked you what percent of the world’s wealth millionaires and billionaires own, what would you have guessed?
There are now 17.9 million millionaire households in the world, up 8% from 16.6 million last year, according BCG’s latest report. The US has the most millionaires, with over 7 million millionaire households, with China ranking second with 2.1 million.
Further, the report predicts that multimillionaires and billionaires will see the strongest growth in the next several years. Those worth $20 million to $100 million are projected to see their wealth grow 8.4% a year on average through 2021, according to the report. Those worth more than $20 million will own more than a fifth of the world’s wealth by then.
According to a report earlier this year from OXFAM International (a global organization working to end poverty), just eight individuals, all men, own as much wealth as the poorest half of the world’s population.
This surprising finding was announced by OXFAM at the World Economic Forum in Davos Switzerland in January. The report concluded that the “wealth gap” is now wider than ever before. In 2010, by comparison, it took the combined assets of the 43 richest people to equal the wealth of the poorest 50%.
The Rich are the Richest in the United States
As discussed above, wealth inequality is rising around the world, but in America it’s been in overdrive. The share of income going to the top 1% in the US has more than doubled in the last 35 years according to BCG – after dropping in the decades after World War II (when the rich were taxed at high double-digit rates).
BCG reports that 63% of America’s private wealth is in the hands of US millionaires and billionaires. By 2021, their share of the nation’s wealth will rise to an estimated 70%.
The question is, where is all this wealth coming from? Globally, about half of new wealth comes from existing financial assets – rising stock prices, yields on bonds and bank deposits – held predominately by the already well-off.
The rest of the world’s new wealth comes primarily from what BCG classifies as “new wealth creation,” from people saving money they’ve earned through labor or entrepreneurship or both.
In the US, the creation of “new wealth” is a minor factor, making up just 28% of the nation’s wealth increase last year. It’s even lower in Japan, at 21% as you can see below. In the rest of the Asia Pacific region, meanwhile, 66% of the rise is driven by new wealth creation.
It comes as no surprise – for a country where almost a quarter of income goes to the rich and where they hold the highest concentration of wealth – that a big chunk of the world’s richest people have chosen to call America home.
Two out of five millionaires and billionaires live here, and their ranks are growing fast. There are now about 7 million Americans with net worth of more than $1 million, and BCG expects 10.4 million millionaires and billionaires in the US by 2021. That’s an annual growth rate of over 8%, or about 670,000 new millionaires each year – this despite the sluggish economy.
The only countries with a higher concentration of millionaires than the US are much smaller nations such as Bahrain, Liechtenstein, Switzerland, etc., most with reputations as havens for the wealthy.
All of the facts and figures cited above point to the politically-charged topic of rising income inequality. That’s a complicated subject that, due to space limitations, I’ll leave for another time.