The cumulative wealth of the world’s richest households will more than double, to $202 trillion over the next ten years, according to a study conducted by the Deloitte Center for Financial Services and Oxford Economics.
Based on data from 25 developed and developing economies, the number of households in those countries with more than $1 million in wealth will increase from 37,978 at the end of last year to 65,521 by 2020. Their wealth holdings, which include financial assets (stocks, bonds and other investments,), as well as non-financial assets (primary residences, durables, business equity and other assets), will more than double from $92 trillion to $202 trillion.
The projections are based on a breakdown of current wealth holdings, projected global growth rates, interest rates, asset prices, and investing patterns of the countries in question. The estimates are based on data from the Oxford Economics Global Model.
Not surprisingly, fast-growing emerging economies such as China, Brazil and India will experience the fastest growth in millionaires’ wealth. For example, the number of millionaire households in China is projected to grow from 1.312 million to 2.5 million by 2020 — and the total wealth they hold will rise from $1.67 trillion to $8.24 trillion.
(See: The five countries with the most ultrahigh-net-worth investors in 2020)
The total wealth in emerging markets households will rise by 260% in the next ten years, versus a projected growth rate of 107% in the developed countries, the study predicts.
Nevertheless, the vast amount of wealth currently in the developed countries will assure that those countries continue to amass more wealth, albeit at a slower rate than in developing countries.
“Financial advisory firms in the U.S. and Europe who overlook their home bases will do so at their own peril,” said Andrew Freeman, executive director of the Deloitte Center for Financial Services. “It’s the law of large numbers. With the big base of wealth in the U.S. and Europe, the effect of 4% to 5% compounding over ten years generates huge numbers.”
The United States is expected to have 20.6 million households with more than $1 million dollars in wealth by 2020 — compared to 10.5 million today.
The total wealth of these households will rise from $38.6 trillion to $87.1 trillion.
The U.S. currently has 496,000 households with more than $30 million in wealth, more than ten times the next closest country—China, which has 46,000.
This number of ultrahigh-net-worth in the U.S. is forecast to climb to 620,000 in ten years, versus 327,000 in China.
While U.S. millionaires’ wealth as a percentage of global millionaires’ wealth dropped from 55% in 2000 to 42% in 2011, it is projected to increase to 43% in 2020.
It is not simply the large base of wealth in the U.S. that assures its continued growth but also the range of choices that Americans have in terms of where to invest. “Where the wealth is generated is different from where it’s invested,” said Mr. Freeman. “Investors in developed countries have access to a much wider range of asset classes than households in developing countries.
Within the United States, Connecticut currently has the highest density of millionaire households (14.2%) in the country, but New Jersey is projected to have the highest (24.6%) in 2020. California, Texas, New York and Florida (in that order), are projected to have the greatest number of millionaire households in 2020.
Arizona and Nevada will likely experience the greatest growth in the number of millionaire households between 2009 and 2015.
