Season’s greetings to everyone as we all celebrated Diwali!! All of us work so hard to earn money and also plan our finances so that we are able to generate wealth in the long run. As we become global citizens, a good reference is the 2018 Credit Suisse Global Wealthreport which compiles and reports data on wealth generation across the world.
Global wealth trends
- Globally wealth grew by 3.6% last year to 317 Trillion USD (adjusted for population growth) with 42 million millionaire’s world wide
- The United States has generated 58% of incremental wealth over the last five years. This is even higher than the 40% share over the last ten years
- Wealth distribution is extremely unequal. If you had more than 7.3 lakhs INR (10,000 USD) then you are richer than 64% of the world’s adult population
Wealth generation trends in India
- At 6 Trillion USD, India accounted for less than 2% of the world’s wealth. This is despite a fivefold growth from 2000 to 2018
- Wealth in India has actually grown at a slower pace than mature markets. We have 91% of our wealth in physical assets (real estate and gold)
- We have only 9% of our overall wealth in financial assets. This is 8 times lesser than market leaders in wealth generation like the US (72% of the wealth in financial assets)
- If you had more than 73 lakhs INR (100,000 USD) then you are in the top 1% of Indian families in terms of wealth
As we look at the trends across 15+ major economies, three key points stand out:
- Looking at wealth generation patterns globallythe move from physical (read as real estate and gold) to financial assets (mutual funds, insurance plans)is a once in a life time opportunity for wealth generation which has happened in mature markets. India will go through a similar trajectory and this opportunity is to be fully capitalized in the process of wealth creation
- We have global opportunities for wealth generation. Diversification into international asset classes is to be considered once we have built a firm base of assets in India
- Wealth inequality in India is worse than other markets. For many of us, education, family support, corporate growth and our skills have helped us move to the top of the wealth pyramid in India. We should be thankful that all of this has come together for us at the right time.
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