As I told you recently, where the rich are moving to – and away from – says a lot about the places in the world that are safe (and not safe) for money.
You see, most high-net worth individuals – people who have investable assets of more than US$1 million, excluding primary residence and collectibles – are good at making money. And in order to stay rich, they also need to be good at keeping their money.
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So the countries that have the most high-net worth individuals (HNWIs) moving to them tend to be considered safe for money. (And/or: They’re also nice places to live. In the “wealth/quality of life” tradeoff, rich people have the luxury of living in places that aren’t cheap.)
(A country’s stock market, investment environment, currency and the number of HNWIs moving into and out of a country can all contribute to a country’s total wealth growth.)
What private wealth means for a country
Private wealth reflects assets that are held by individuals living in a country, which includes all their assets – encompassing property, cash, equities, bonds and business interests. And how much private wealth is controlled by the residents of a country says a lot about the safety of that particular country.
After all, rich people wouldn’t keep their money someplace that they weren’t convinced beyond the shadow of a doubt was safe.
And – maybe most importantly – growth in private wealth in a country says a lot about the economic environment of a market. Rising private wealth means that people are making money – which they in turn may be re-investing in the economy.
Conversely, a decline (or slow growth) in private wealth is bad news. It suggests that there aren’t opportunities to develop wealth – or rich people are exporting capital (i.e., sending their money to other places).
So, by this definition, which countries have the most private wealth?
Research group New World Wealth tracks private wealth. In 2017, the group estimated that total private wealth held worldwide reached US$215 trillion (for an average of US$28,400 per person on earth).
As you can see in the table below, the U.S. was the wealthiest country last year – with US$62 trillion of private wealth in the country. China was a distant second with US$24 trillion… and Japan was third, with US$19 trillion. India was the only other emerging economy on the list.
But growth of wealth in most of these countries is slowing down.
The U.S. only saw 20 percent growth in the 10 years from 2007 to 2017. Japan saw 22 percent growth. When you’re a developed nation (especially one that is experiencing a major population decline), it’s harder to see a lot of growth. It’s much easier to grow when you’re starting from a low base. That’s why China, for example, saw a massive 198 percent increase in wealth from 2007 to 2017.
So which markets are seeing the most growth in private wealth?
New World Wealth estimates that total global private wealth has risen 27 percent over the past 10 years.
The table below shows the countries that have had the biggest growth in wealth over the past 10 years.
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As you can see, the biggest gainers are in Asia, Africa and South America.
Private wealth in Vietnam has grown an enormous 210 percent… China’s has risen 198 percent… and Mauritius, an island nation in the Indian Ocean (and a friendly domicile for offshore corporations), has grown 195 percent. (Also note Ethiopia and Sri Lanka featuring prominently.)
These are the countries losing ground…
On the other side of the spectrum, the countries posting the biggest declines in wealth aren’t surprising. A who’s-who of economic value destruction – along with old-fashioned trudging slow macroeconomic growth – are in the bottom ten. The table below shows the countries that have experienced the biggest declines in private wealth over the past ten years.
It shouldn’t come as much of a surprise that Venezuela has performed the worst (we’ve written about the country’s problems before). Most major European Union countries (including several that have the most private wealth overall) also performed poorly over this period, most prominently Greece. Italy, which is still on the cusp of its own crisis, has already seen a massive erosion of wealth. And other countries in Europe are also marked laggards – likely in part due to high taxation regimes.
In short, developed countries like the U.S., Japan and the UK are some of the wealthiest today… but developing countries, in Asia in particular (like Vietnam and China) are likely to be the leaders in the years ahead, thanks to strong economic growth and a booming investment and business environment.
Publisher, Stansberry Churchouse Research
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