What Does It Mean to Be a High-Net-Worth Individual?
Defining a high-net-worth individual (HNWI) varies depending on who you ask, yet the core idea remains the same: it’s someone boasting a considerable stash of wealth. Generally, this translates to possessing liquid assets somewhere in the ballpark of $1 million to $5 million.
Those rolling with fortunes that tip the scales at $30 million or beyond earn a special tag—ultra-high-net-worth individuals (UHNWI). Net worth, the key metric here, sums up everything you own and then takes away what you owe, spotlighting liquid and investable assets.
What Exactly Counts Toward Net Worth?
Rick Zimmerman, once a senior VP for private banking and commercial lending at Capitol Bank in Madison, Wisconsin, highlights the following as part of your financial tally:
- Funds sitting in your checking accounts
- Your business ventures and ownership stakes
When it comes to real estate, your home’s current market value minus any outstanding mortgage balance comes into play to shape your net worth.
According to Pamela Chen, CPA, CFA, chief investment officer at Refresh Investments LLC in Santa Monica, “In finance circles, a high-net-worth individual usually refers to those holding liquid assets, such as investment and banking accounts.”
Perks of Being a High-Net-Worth Individual
If you’re part of the HNWI club, you might enjoy fatter returns on your savings accounts via elevated annual percentage yields (APYs). Loan rates could be more favorable, and exclusive financial products or services may open doors only for you. Often, a dedicated team or personal representative is at your beck and call, managing your wealth with tailored expertise.
Snapshot: Global Wealth Trends and HNWI Data
Projections from UBS’s 14th annual wealth report forecast a 38% surge in global wealth over the next four years. Notably, this study classifies ultra-high-net-worth individuals as those holding liquid assets equal to or exceeding $50 million.
- 2022 marked a downturn in worldwide wealth—its first dip since the financial crisis of 2008.
- By 2027, it’s expected that the planet will be home to 86 million millionaires and around 372,000 ultra-HNWIs.
Climbing the Ladder to High-Net-Worth Status
While the road to joining the ranks of the wealthy typically demands grit, savvy money management, and consistent saving habits, it’s not an unreachable summit. In today’s financial ecosystem, those considered HNWIs usually enjoy perks far beyond what your average banking customer can access.
Improving your financial standing is a journey anyone can embark on, armed with budgeting techniques and saving strategies designed to build a more robust economic foundation.