Why the number of Aussie millionaires is skyrocketing

How wealthy are Australians compared to the rest of the world? Being the ‘lucky country’, we Aussies have always fancied ourselves as a fortunate lot. But exactly how lucky are we when it comes to wealth? That’s exactly what a new report from Credit Suisse answers. The Swiss bank has just released its Global Wealth Report for 2021. And it makes for some interesting reading.

Firstly, it finds that Australians have never been wealthier. 392,000 Australians managed to increase their net wealth to more than US$1 million last year, making the total figure 1.8 million. That means that 1 in 10 Aussie adults are US-dollar millionaires. Head of private banking at Credit Suisse Australia, Michael Marr,  told the Australian Financial Review (AFR) that this number is expected to increase by 70% to 3.1 million over the next five years too.

These numbers already put Australia at the top of the global pile when it comes to wealth. The report found that the only country with a greater proportion of wealthy residents as a proportion of the population was Switzerland. Almost 15% of the Swiss adult population were estimated to be US-dollar millionaires. But we come out on top in another respect. The report found that the median Australian adult had a net worth of $US238,000 at the end of 2020. That puts our median net wealth higher than every other country in the world.

Aussie wealth: The lucky country indeed

So why this dramatic jump in Aussies’ net worth? Well, the report found that it is largely thanks to two factors: booming house prices and a rampaging ASX share market.

By now, most of us would be at least vaguely familiar with the current state of the Aussie housing market. Since Australians tend to own more housing compared to other countries around the world, the rapidly rising prices of the past 2-3 decades have had a huge impact on the number of Aussie millionaires. But the performance of our local share market has also helped.

The report found that around 42% of Australian wealth assets were concentrated in financial assets like ASX shares. Mr Marr told the AFR that Aussies hold an “unusually large” proportion of our wealth in local shares. This was likely due to the favourable tax benefits of franking (which are not available for international shares).

The S&P/ASX 200 Index (ASX: XJO) has not performed as well as some of the other global share markets such as the US S&P 500 Index (INDEXSP: .INX). Even so, it has still managed to return 9.5% year to date so far in 2021, 22.9% over the past 12 months, and more than 52% since the March lows last year. That would have been a huge benefit to the 42% of Australian wealth that is concentrated in financial assets.

The lucky country indeed!

The post Why the number of Aussie millionaires is skyrocketing appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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