Joining the uber rich league

Ever wondered where millionaires park their money? Bet you are thinking stocks and shares and mutual funds and real estate and all that jazz. But while there is all this and more by way of a balanced portfolio, the recently released Merrill Lynch and Capgemini World Wealth Report 2007 also reveals that there is a definite trend towards “investments of passion”. Think luxury collectibles, which can be jet planes, yachts or cars. Think ultra-expensive art. And, predictably, think jewellery.

HNWI Surge in 2006

Singapore, India, Indonesia and Russia witnessed the highest growth in HNWI population.

9.5 million people globally hold more than $1 million in financial assets, an increase of 8.3% over 2005.

HNWI wealth totals $37.2 trillion, representing an 11.4% gain since 2005.

But at the same time, the high net-worth individuals (HNWIs) are not venturing too much into alternate investment according to the report; instead they are increasing the financial resources, time and thought that they spend on philanthropic causes. Philanthropy is increasingly being used to provide HNWIs with a social return on their investments, rather than to just leave a legacy for future generations.

The way in which HNWIs dip into their pockets is also evolving due to an increasingly global perspective combined with an increase in the availability of investment approaches that enable support of a broader range of causes.

And given that the world’s fastest growth in high net-worth population in 2006 took place in Singapore and India, many such trends can be seen on desi shores too. The report says the number of HNWI Indians has risen by 21% in the last one year (see Rising Indian Millionaires) next only to the growth witnessed by Singapore. In absolute numbers India is second only to Russia in producing the fastest HNWIs at 100,000 compared to 119,000 Russians.  

Globally, 9.5 million HNWIs collectively command a wealth of $37.2 trillion, easily surpassing the GDP of several nations. This wealth has grown at 8.3% in 2005-6. The United States dominates with 2.9 million or 30% of the world HNWIs while India is pulling up with a shade above 1% HNWIs.

Still Indians have a lot to cheer about—the number of HNWIs grew at 20.5% in 2005-6, mostly due to a strong stock market performance. The growing stock market has only provided more opportunities for HNWIs to cultivate their wealth.

It emerges from the report that the BRIC nations (Brazil, Russia, India and China) are playing increasingly important roles in the global economy. India continued its strong expansion, with a real GDP growth of 8.8% in 2006, thanks to growing private consumption—9.1% in 2006, up from 6.6% in 2005.

Now the hope is that more Indians will join the HNWI list next year, more so with a strengthening rupee against the dollar.