What would your life look like if you were rich? Now, I’m not talking ‘small rich’ - you have one nice car and a $2 million dollar home. Oh no, I’m talking BIG rich. Like huge. As in you own a home in Vaucluse in Sydney’s east and have a plethora of high-end cars to drive. Or not drive, maybe they’re there just for show.
Well, to give you a taste (because let’s be real, that’s all we’re ever going to get) of what it means to be rich, here’s some information to feast your eyes on.
Knight Frank’s Wealth Report for 2023 looked at what it takes to be among the top 1% by net worth, and prepare yourself because it’s scary reading for the other 99% of the population.
What you need to earn to be among our richest 1%
To be among Australia’s wealthiest 1% requires $US5.5 million ($8.3 million) of net wealth…
We’re ranked third globally only behind Monaco ($US12.4 million) and Switzerland ($US6.6 million).
I’m shocked, I really am. But what’s funny is that there are certainly a number of Aussies who’ve hit this milestone.
I mean, think about. Owning a typical house in Vaucluse - where $8.6 million is the median price - would automatically put an Australian among the nation’s wealthiest 1%. Assuming they don’t have a mortgage. They don’t even need all the other fancy and expensive gadgets - they’ve already made it.
According to the report, the wealthiest Aussies typically own about three homes, and the vast majority of their wealth remains in this country. Commercial property and shares are other big asset holdings.
What’s even more staggering is that Australia has almost doubled its 2021 wealth figure, revealing the rich got even richer during the pandemic. Two years ago, Australia was lower on the list, coming in at 7th place with $US.2.8 million being the baseline.
|Country||Net wealth needed to reach the top 1% club|
|New Zealand||$5.2 million|
|Hong Kong||$3.4 million|
Source: Knight Frank Wealth Report 2023
If you’re desperate to be in the top 1%, you could always consider moving overseas. Having a net worth of more than $US175,000 in India or $US20,000 in Kenya would make you one of the richest in these countries. Time to book a flight?
The report also found the number of ‘high-net-worth individuals’ – defined as those with a net wealth of more than $US1 million – was set to grow by 71.1% between 2022 and 2027 in Australia. Up from 2,214,326 in 2022 to 3,789,629 in 2027.
This forecast level of growth in the number of high-net-worth individuals in Australia is 2.5 times the previous five-year period of 2017 to 2022.
The number of ‘ultra-high-net-worth individuals’ in Australia – those with a net wealth of more than $US30 million – is set to grow by 40.9% over the next five years. Up from 17,456 in 2022 to 24,589 in 2027.
One can only dream.
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What Aussies think makes you rich
What a lot of us perceive to be considered rich is a lot different to the eye-watering figures displayed above.
According to a survey published by Dacxi last year, there are three different ways Aussies define what it means to be wealthy.
Two-in-five Australians interpret it as earning over $150,000 per year after tax
More than one-in-three define it as having a net worth over $1 million
Nearly a quarter interpret it as owning a home outright
Our retirement savings also provide an idea of wealth levels, mind you they’re a lot lower than $8 million.
Average super balances are around $360,000 for men and $289,000 for women aged 60-64. To retire comfortably, the lump sum now required at 65 years is $690,000 combined for couples, and $595,000 for singles. Not even close to reaching a ‘high net worth individual’ status. But it does give you an idea of the amount of money most of us have stashed away by the time we’re old.
Is being wealthy really the ‘dream’ it looks to be?
Don’t get me wrong. I’m not saying being wealthy is horrible and the worst thing in the world. Au contraire my friend.
I’ll tell you now that I would not say no to having an extra few dollars thrown my way. Paying off my mortgage and going on multiple holidays every year, hello sign me up please.
But while swimming in cash may be your lifelong dream, being rich isn’t all fairies and rainbows. Even Good Charlotte wrote a song about it, remember?
Lifestyles of the rich and the famous
They're always complainin'
If money is such a problem
You got so many problems
Yeah, you remember it now.
But in all seriousness, studies have shown that being rich isn’t all it’s cracked up to be.
Researchers have theorised that wealth makes us less generous because it makes us more isolated – and isolation has a direct effect on happiness. Psychologically, acquiring wealth makes us want to distance ourselves from others, often due to a feeling of competition and selfishness. And physically, the wealthier we become, the more likely we are to build boundaries between ourselves and others.
There’s plenty of movies you could watch that demonstrate this exact thing - watch Knives Out featuring Daniel Craig. I know it’s a murder mystery but it definitely highlights how money can split up a family all because of selfishness.
On the other side of the spectrum, some research suggests money can buy you happiness.
According to a study conducted by Senior Fellow Matthew Killingsworth from University of Pennsylvania’s The Wharton School, higher earners are happier, in part, because of a greater sense of autonomy. When you have more money, you have more choices about how to live your life.
Seems as though being wealthy is a half win, half lose scenario. Whether it brings you happiness or not really just comes down to how you personally deal with your wealthy lifestyle. Want to be a loner with a lot of money? Go for it. Want to be rich but maintain your values and friendships? Go for it.
While I can’t give you advice on how to acquire $5.5 million, there are a number of savings accounts offering interest rates above 5% if you want to start building up some cash. It’s better than a poke in the eye.
Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.
Savings Maximiser (<$100k)
Savings Maximiser (<$100k)
|No monthly fees|| |
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