Number of new millionaires rising at fast pace

By Special to MoneySense on June 20, 2014
Estimated reading time: 2 minutes

The gap between the rich and everyone else in many developed countries is widening

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Nearly 2 million people around the world became millionaires last year, a year-over-year increase of 15 per cent, as surging stock and home markets lifted the fortunes of the wealthy. The increase raised the number of millionaires to a record 13.7 million. A report from consultant Capgemini and the Royal Bank of Canada estimated the combined net worth of millionaires at $53 trillion in 2013. That was up 14 per cent from the year earlier — the second-biggest increase since the two companies began issuing wealth reports with comparable data in 2000. The accelerating pace of wealth accumulation among the affluent coincides with a widening gap between the rich and everyone else in many developed countries. Japan gained 425,000 millionaires — a rise of 22 per cent, its biggest year-over-year increase since 2000. Japan’s was the largest percentage gain among the 25 countries with the most millionaires. A big reason for the jump in Japan was surging stocks. The Nikkei 225, the main stock index, rose 57 per cent last year. By contrast, the Standard and Poor’s 500, an index of big U.S. companies, rose nearly 30 per cent. Japanese millionaires totalled 2.3 million, second only to the United States. The number of U.S. millionaires rose 570,000, 17 per cent, to 4 million. Globally, a bigger increase in the number of millionaires and in combined wealth occurred in 2009, when many stock markets began rising from multi-year lows. Much of the world’s stock wealth is concentrated among the rich. In the United States, for instance, 80 per cent of stock is owned by the wealthiest 10 per cent of households. Rising stock prices have helped boost the net worth of the wealthy and, thanks to dividends, their income. By contrast, the middle class in many countries has struggled as millions of jobs wiped out in the financial crisis have yet to return. And wages, their primary source of income, have barely kept up with inflation. In the United States, incomes for the highest-earning 1 per cent rose 31 per cent from 2009 through 2012, after adjusting for inflation, according to data compiled by Emmanuel Saez, an economist at University of California, Berkeley. For everyone else, income rose an average of 0.4 per cent. The new wealth report tracks net worth of individuals, with assets defined as investments such stocks, bonds, cash, and primary residences. The report is based on a survey this year of more than 4,500 people in 23 countries.