There was much talk of inequality at this year’s World Economic Forum in Davos. It is ironic then that the host country Switzerland has the greatest percentage of residents in the top 1% of the world’s wealthiest.
Over 13% of Swiss are in this group, the highest proportion in the world according to the Credit Suisse Global Wealth Databook 2014. Over 800,000 Swiss residents have wealth of at least US$ 798,285, the minimum required to be included in this group. These individuals comprise 1.7% of the global total, incredible for a country with only 0.1% of the world’s population.
On the other hand having net worth of CHF 720,000 (US$ 798,285) in Switzerland doesn’t represent a life of Ferraris and super yachts. It could be someone with a modest mortgaged apartment in Geneva and a few hundred thousand in a pension plan wondering whether or not they should update their sensible car this year. The Economist does a great job of debunking the importance of the top 1% in an article entitled: Forget the 1%. It shows that it is the ultra rich, or top 0.1%, who have money to burn rather than the majority of those in the top 1%. It is also the ultra rich that have seen their wealth grow the most in recent times. In 2012 this group held 22% of America’s total wealth.
Paradoxically measures such as Quantitative Easing (QE), used to boost economies in the hope of containing unemployment and protecting the most vulnerable, have driven up the value of stock markets making those at the top who own a lot of these assets even wealthier.
So how do you get into this high net worth club? Mainly by owning things. Individuals with assets get to add the income and capital gains from their investments to what they earn and save from their labour. Being older helps too as you have had more time to accumulate assets and benefit from their rise in value. Being Swiss doesn’t hurt either.
For more on this:
Forget the 1% (The Economist – in English)
Credit Suisse Global Wealth Report (Credit Suisse – in English)