Australia has become a millionaire factory.
The total number of millionaires in Australia rose 31% from 485,000 to 635,000 during the past year - the biggest rise in recent history.
And these millionaires control $2.77 trillion in investable assets (up 37%).
These figures come from ASX listed Praemium's study of Australia's High Net Worth (HNW) investors.
Just to make things clear... an HNW investor has $1 million in discretionary investable assets, including their self-managed super fund, excluding their super, home, and business net of debt.
Australia’s HNW investors are more numerous, wealthier, have fewer significant worries, and are increasingly confident about the direction of the stock market, according to the research.
The number of millionaires in Australia was fairly constant between 2017 and 2020, before this year’s dramatic rise.
There were 424,000 millionaires in Australia in 2017, 434,000 in 2018, 458,000 in 2019 and 488,000 in 2020.
I'm not surprised by this remarkable increase in the wealth of these high net worth individuals considering the dramatic increase in value of properties and shares owned by them.
There was considerable growth in HNW investor numbers across all wealth bands.
- those with $2.5-5 million of assets rose from 170,000 to 179,000;
- those with $5-10 million of assets rose from 56,000 to 59,000, and
- those with $10-70 million of assets rose from 18,000 to 28,000. Those 28,000 people control over 40% of the assets held by HNW investors.
The portfolios of these high net worth individuals were reasonably predictable with 40 per cent of their net assets in the share market and the further 32 per cent in property.
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I found it interesting that ETFs and cryptocurrencies were the asset classes that saw the largest growth in uptake among HNWs during the past year.
Anthony Wamsteker, CEO of Praemium Ltd, said the research results demonstrated not only the resilience of Australia’s wealthier investors but also the resilience of Australian capital markets, which rallied significantly following a sharp fall at the start of the COVID pandemic in early March last year.
“During the pandemic, Australian investors could have been excused for retreating into their shells a little with the stock market bumping along the bottom for a while,” he said.
But the research shows that Australia’s wealthiest investors are a very optimistic group.
Once they got over the shock of the fall in the stock market, they were happy to weigh back in. Their levels of optimism are much higher than they were a year ago.”
Australian HNWs are far less worried today than they were a year ago.
The chief concerns among HNWs are:
- COVID (45%, down from 68% last year);
- tension between the world’s major economies (43%, down from 53% last year); and
- another global market crash (40%, up from 37%).
The two biggest drops in concerns over the year were concerns about the Australian economy (63% to 30%) and concerns about the White House administration (47% to 19%).
Some other interesting findings from the survey:
- Almost a third of the respondents said that I didn’t use investment advisers because they don’t have any need for them and that percentage is rising.
- The majority of the high net worth Australians expect to leave more than 50 per cent of their wealth to their family as an inheritance, and not surprisingly this percentage rises as we move up the levels of wealth.
- Of the new entrants to the millionaire's club (those in the $1million to $2.5million bracket) 46 per cent had received an inheritance and 17 per cent are expecting to receive one. But once wealth rises above $10million then 70 per cent have received an inheritance.
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