The richest 1% club: the dollar bills you need to make it

What would your bank balance look like as a genuine 1%er? As in, someone with a net worth among the top 1% of anyone in the nation? (Not to be confused with outlaw motorcycle enthusiasts.)

Well thanks to global property firm Knight Frank - which details what it takes to be among this hyper-privileged group in its Wealth Report - you can get a pretty good idea.

So before you read on, forget everything you’ve been told about being thankful for what you’ve got and let envy take over as you marvel at the many millions of dollars you need to be among Australia’s richest.

What it takes to crack Australia’s richest 1%

To be among Australia’s wealthiest 1% required a net worth of at least USD$4.76 million (roughly AUD$7.27 million based on average conversion rates at the time) as of Q4 2023.

Here are a few things $7.27 million was equivalent to at the time:

• About 1.7 million kilograms of bananas

• Five houses in Sydney at the median price

• 13 Lamborghini Aventadors (with enough left over to buy a unit at the median price for rural Western Australia)

• An approximate 7% stake in the Brisbane Broncos

This doesn’t mean you need to have $7 million sitting in the bank to qualify - after all, net worth is the sum total of all of your assets, minus any debts. If you own a house in Bellevue Hill for example, where the median house price over the year to February ‘24 was $10,340,000 according to REA, you likely make the cut purely off the back of your family home, assuming it isn’t mortgaged.

When ranking countries by the minimum net worth needed to be in their respective population’s 1% club, Australia sits seventh, just ahead of New Zealand in eighth (USD$4.57 million). For nations in the Asia Pacific region, the Aussies are behind only Singapore in fifth (USD$5.23 million).

Source: Knight Frank 2024 Wealth Report

At first glance, it looks like Australia is a nation with plenty of extremely wealthy people, which of course it is. However, there’s been a bit of a drop off compared to the same report in 2023 (measuring Q4 ‘22) when Australia ranked third overall, with a net worth of USD $5.5 million (at the time about $7.55 million AUD) necessary to make the cut.

There are a number of reasons why this might have happened. Since Q4 2022, GDP per capita in Australia has been falling, with economic growth propped up by the increasing population. While the ASX still gained 7.8% through 2023 (with most of this growth happening in December), the economy wasn’t firing on all cylinders, so some big earners likely took hits from underperforming businesses.

Meanwhile, net overseas migration was about 518,000 through the year to June ‘23, the largest since the ABS started gathering records. If we assume that a smaller portion of these migrants have a net worth above AUD $7.27 million than the established Australian population, that could be why the 1% threshold is lower.

Ultra High Net Worth Individuals in Australia

According to Knight Frank, as of Q4 ‘23 there were 15,347 ultra high net worth individuals (UHNWI) in Australia, up 2.9% from the previous year. By 2028, the number of UHNWIs in Australia is expected to grow another 27%, up to 19,491. To be recorded as an UHNWI, you’ll just need a net worth north of USD $30 million (roughly AUD $45 million) so as long as you have $100, you’re only ever 19 hands of blackjack* away!

*Please don’t take this seriously - gambling is definitely not a sustainable or legitimate method of growing wealth, particularly in Australia.

Globally, there were 626,619 UHNWI’s so Australia has about 2.5% of them. The global number also grew in 2023, up 4.2%, and is expected to grow another 28.1% by 2028. Knight Frank research also suggests 71% of the existing UHNWIs anticipate they will grow their personal fortune in 2024.

What Aussies think makes you rich

As you’ve probably gathered, you can be outside of the top 1% and still be very well off. But what defines a rich person? Among the Australian public, some focus on salary, while others prefer net worth as a measure.

Salary

According to the most recent ABS earnings data, the average adult in Australia working full-time earns $1,888.80 each week, or $98,217.60 each year, which after tax works out to be about $73,866 (at current 23/24 tax rates). This is the average though, which is distorted by the big earners at the top end of the scale (maybe some of the 1%ers or even the UHNWIs we explored earlier).

Another ABS data set estimates median weekly earnings for all workers at a more moderate $1,300 per week as of August 2023. According to these numbers, anyone who brings in more than $2,820 each week ($146,640 annually before tax) earns more than 90% of Australia.

Net worth

The most recent average net worth estimates from the ABS are from 2020, so are a little dated. We can approximate by dividing the total household wealth estimate from September 2023 ($15.31 trillion) by the total Australian working age population at the time (roughly 20.89 million per the ABS), which gives an average net worth of $732,934. Again though, these numbers are likely inflated by those at the top end.

As with salary, median can be a better indicator of what is typical. According to the latest Global Wealth Report from Credit Suisse (released in 2023), Australia’s median wealth per adult by the end of 2022 was $USD247,450 (about $AUD365,000 at the time), which is the second-highest in the world (second only to Belgium).

It’s probably safe to conclude that by most reasonable standards, you’ll be considered very well off if your net worth is approaching $1 million.

Savings.com.au’s two cents

Everyone’s definition of wealth is relative. Based on a FoodBank Australia survey of 107,000 households, more than 20% of Australians were ‘severely food insecure’ in 2023, while the ABS estimates there are more than 100,000 homeless people throughout the nation. For people who are struggling, their definition of what it means to be wealthy could be very different to what those on average salaries would say. While it’s understandable to look longingly at some of the above numbers, if you can put food on the table and a roof over your family’s head, you are pretty lucky in comparison to many people, both right now and throughout history.

When it comes to growing your personal wealth, the importance of managing the money you do bring in can’t be overstated. While savings accounts, term deposits or other investments might not instantly elevate you to the highest-earning brackets, you can ensure you’re generating more from the money you are bringing in.

This article was initially published by Hanan Dervisevic in 2023

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

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