High Net Worth Individuals
Are you a high net worth individual? Building a high net worth usually involves some combination of hard work, generational wealth, professional success, and smart investment choices.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
If you are among high net worth individuals with more than $10 million in liquid assets, we recommend reading our guide on selecting a financial advisor for managing assets between $10 million to $500 million. You’ll find a lot of useful information that will help you manage your wealth better and increase the value of your assets.
Pillar Wealth Management primarily works with high net worth and ultra-high net worth families with $5 million to $500 million in liquid assets. Our wealth managers specialize in money management and help you make better investment choices to grow your net worth. Click here for a free consultation session.
In this article, we will be answering questions like:
• Who are high net worth individuals?
• What is the net worth of the top 5%?
• Where do high net worth individuals hang out?
• What do high net worth individuals need to keep in mind for wealth management? Let’s begin.
What Are High-Net-Worth Individuals (HNWIs)?
There is no official or legal definition of high net worth, but the consensus is that individuals who own at least $1 million in investable assets are considered to have a high net worth. Investable assets, or liquid assets, do not include a home or other real estate; rather, they include assets that can be fairly easily converted to cash, such as stocks, bonds, and money market accounts.
Because financial advisors are paid a percentage of the value of the client’s assets, they appreciate having customers with a high level of liquidity in their portfolios.
Testimonial From Satisfied Clients
Chris Snyder
We have a comfortable feeling working with you.
And it is always sharing our stories over the years of our children’s growth.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
I highly recommend Pillar Wealth Management
Not only did Chris help me emotionally through a life-altering time, his gentle guidance assisted me in investing the proceeds of my home and gaining additional capital through the sale of personal possessions. I was able to purchase a new home and still have enough for a substantial investment with Pillar Wealth. I have been with these fine, trustworthy financial advisors for 10 years now, living on that growing investment with Chris’s wise counsel. I am pleased to report that I, once again, live a comfortable and financially secure-life today. I highly recommend Pillar Wealth Management.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Pillar Wealth Management
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Testimonial from Col. Robert B.
When I was getting ready to retire I looked into what my retirement income would be. I wanted to maintain my current lifestyle and hoped to maintain my existing income. I did some number crunching and knew I would fall a little short. I had $23,000 that I could invest in hopes that it would eventually provide a supplement to my monthly income.
I started an interview process with several investment companies. I provided them with the financial figures I had been analyzing, knowing I would fall a little short. They all said that if i invested with them that I would meet my goal, except Chris. He said I would fall a little short. Truth will out, I invested with Chris because I felt he was the only one that was honest with me. The first year was a terrible year for the economy. Not only did my investment not grow but I lost $3,000. Chris recommended I ride it out and not make any changes. The same advice he has given over the years. My investment start to grow, sometimes rapidly other times slow but always growing. For several years now both my wife and I take a monthly supplement that comes from the annual growth of the investment and allows the principal to continue to grow.
Pillar Financial has simplified my tax returns by sending a copy of all documents pertaining to my investments directly to my tax preparer. Also, Chris is in direct contact with my tax preparer and there have been several incidents where they have communicated directly with each other.
There was one incident of personal attention that bears mentioning. My family have all moved to Arizona. On a visit to them in April of 2019 we were looking around the countryside with the thought that we might want to move there also. As luck would have it, we looked at a house that my wife fell in love with. We spent that afternoon in the realtor’s office with the realtor on one phone negotiating with the seller and me on another phone with Chris who was advising me on my negotiating position. He finally came up with a figure that I could take out enough to make a cash offer without incurring a tax liability. It took three phone calls while Chris did the number crunching with my investment but the cash offer was accepted. We are planning to move into the house as soon as the remodel is completed. Even though we will be spending the rest of our days living in Arizona, we plan to keep our investment portfolio with Pillar Financial.
Over the years I have recommended Pillar Financial to family members and friends. I was, and still am confident that they would get the same professional and personal treatment that I have received. I highly recommend Pillar Financial for anyone who is looking for an investment counselor.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris and Hutch
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Thanks so much for making our life effortless
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris Synder & Pillar Wealth Management
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris Snyder & PWM
From our first meeting with Chris Snyder it was clear this would be a good fit for us. Chris really listened and took the time understand what we wanted to do in retirement. He showed us how we could meet our goals without unnecessary risk. As things changed over time Chris helped us adjust the plan. We have regular communications to make sure we remain on track. Anytime we reach out we receive prompt responses and an ad-hoc call is never a problem.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris Snyder
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris Snyder
Chris has been a wonderful financial advisor. He listens and makes adjustments if necessary. I believe him to be fair, honest, intelligent and knowledgeable. ◼ Relationship to Financial Advisor: Current Client ◼ Compensation: This reviewer received no compensation for this review. ◼ Conflicts of Interest: There are no material conflicts ofRead more “Chris Snyder”
Right decision to have fiduciary financial advisor
In January 2022, my sister recommended Christopher Snyder (Pillar Wealth Management). In our Discovery Meeting with Chris, we shared our retirement goals, financial values, the importance of spending time with family, the financial freedom to travel and to volunteer, to provide financial support (education) to grandkids through gifting, the sufficient funding for future medical expenses (long term care), etc.
With that information, Chris completed a gap analysis (on where we are financially and where we would like to be) and created a wealth management plan tailored to our needs.
Fast forward to today, we are liking what we see in our investments. We can see we can achieve what is important to us and still have financial assets pass down to the next generation. Their continuing monitoring and performing stress test on a quarterly basis, Chris’s ability to know how we are financially at all times, his ongoing planning to track that we are on target all these make us feel confident that Chris is the one that we can entrust to manage our investments. We look forward to a long-term relationship with Chris Snyder (Pillar Wealth Management).
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Read more “Right decision to have fiduciary financial advisor”
Great firm!
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris at Pillar Wealth
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
5 Stars
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
5 Stars
Chris you’ve been our advisor for many, many years. We couldn’t be happier with all the service you’ve provided for us. ◼ Relationship to Financial Advisor: Current Client ◼ Compensation: This reviewer received no compensation for this review. ◼ Conflicts of Interest: There are no material conflicts ofRead more “5 Stars”
Exceptional Advisors
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Long time Association
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Our financial advisor for 27 years.
I especially appreciate his timely communications. When the markets have a significant change, shortly thereafter I receive an email. He explains why our investments are safer due to the diversity of our portfolio. Semiannually, we have a review to update my goals and finances. Every question is answered promptly and thoroughly. I highly recommend Chris Snyder at Pillar Wealth Management.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris Synder
I am very comfortable with Chris as my financial advisor.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Hutch, Chris & Pillar Wealth Management
I learned more talking to Hutch for 10 minutes about some specifics on accounts than I ever did from a previous advisor we had for 20 years.
We like how they have a realistic approach towards things and hold a great deal of trust in them! We would highly recommend them! I look forward to working with them more moving forward.
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
Chris, Hutch and Pillar Wealth Management
We greatly appreciate the guidance and services provided by Chris and the entire Pillar organization over the years. Chris has educated us as necessary. We receive regular reports and have productive review meetings with him, and he’s been readily and consistently available by phone and email when we’ve needed immediate input on a topic. His cogent and calm advice has reduced our stress, at least regarding our finances, so that we can worry about other things, like what travel to plan for next year!
Thanks, Chris, et al!
◼ Relationship to Financial Advisor: Current Client
◼ Compensation: This reviewer received no compensation for this review.
◼ Conflicts of Interest: There are no material conflicts of interest.
How to Calculate Your Net Worth
To calculate your net worth, simply subtract the total value of your liabilities from the value of your assets. Liabilities are any kind of debt, loan, or mortgage. Assets include cash, gold, bank accounts, investments, and real property (home, cars, and collectibles).
Benefits of Having a High Net Worth
Having a high net worth means not having to worry about money. If you have a high net worth, you can live off your investments—assuming you aren’t too greedy and careless about expenses. Even with the safest investments, you can earn enough to live on without spending your capital.
If you want more luxury, you can invest in more profitable, albeit riskier, investments while keeping your retirement income secure.
Having a high net worth can give you access to investments not otherwise available. These are investments that require a large minimum placement. Investment firms may offer other perks, such as reduced fees and tickets to various events.
How Do I Become a High Net Worth Individual
With a high-paying job and a frugal lifestyle, where you save a lot of your income every month, you could accumulate $1 million over time. For example, if you earn $100,000 per year and save $25,000, you will have $1 million saved in 40 years—without earning any interest! If you invest that $25,000, you could have a lot more than $1 million.
Many high net worth individuals have built a business from scratch and then sold it, which can be done in less than 40 years if the business is highly successful.
Investing for the long term can yield astonishing results due to compounding (earning on your earnings), but it’s best to start accumulating savings early in life.
Saving something from every paycheck and controlling expenses will go a long way to accumulating wealth.
Types of HNWIs
Beyond high net worth, very high net worth individuals are those who have between $5 million and $30 million in liquid assets, whereas ultra-high net worth individuals have over $30 million in liquid assets.
Then, there are accredited investors, defined as individuals with income exceeding $200,000 in each of the two most recent years and a reasonable expectation of the same income level in the current year, or individuals with a net worth that exceeds $1 million or with assets under management of $1 million, excluding their primary residence.
Accredited investors have the legal right to buy securities that are not registered with regulatory bodies such as the SEC. They also have privileged access to venture capital, hedge funds, and transactions involving complex and riskier investments and instruments.
HNWI Statistics
Recently, Bernard Arnault and Elon Musk were jostling for the position of richest man in the world, each with around $200 billion (depending on the performance of Tesla stock).
The richest woman in the world is Françoise Bettencourt Meyers, with over $90 billion.
The 2022 World Wealth Report states that there are 22.5 million HNWIs and 220,000 UHNWIs, with $87 trillion in wealth.
The top five countries with the most HNWIs are the US, Japan, Germany, China, and France. The top five countries with the most UHNWIs are the US, China, Germany, Canada, and India, with each individual having a net worth of at least $50 million.
In 2022, the number of HNWI grew by 1.7 million (7.8%), and global wealth increased by $6.4 trillion (8%).
Who Are High Net Worth Individuals?
High net worth usually refers to people having over $1 million in liquid assets. Liquid assets refer to assets that can be easily converted into cash. These include cash, cash equivalents, stocks, mutual funds, and accounts receivable.
As a high net worth individual, you can also access specialized services offered by investment banks, wealth managers, and asset management companies. These services are designed to help you sustain and grow the value of your assets, protect your legacy, and plan for retirement.
Choosing the right financial advisor to work with is very important here. If you need help on that front, we recommend reading our guide on how to choose a financial advisor for individuals with $5 million to $500 million in liquid assets.
What Is The Net Worth of the Top 5% Ultra-high Net Worth Individuals?
Now that you know who high net worth individuals are, let’s take a look at how many people in the world fall in this category. Even more so, what is the net worth of the top 5% of high net worth individuals in this category?
According to a 2019 report, over 46.8 million people in the world held assets worth $1 million. 40% of these individuals lived in the United States. As far as the net worth of the top 5% is concerned, this answer can vary depending on the age group you belong to.
As per a report, you will be in the top 5% of the world population if you have the following net worth as per your age:
– Ages 18 – 34: $278,000
– Ages 35 – 44: $1.13 million
– Ages 45 – 54: $2.18 million
– Ages 55 – 64: $4.40 million
– Ages 65+: $3.51 million
If we narrow it down further to the top 1%, here’s the net worth you need to have to fall in this category:
– Ages 18 – 34: $998,000
– Ages 35 – 44: $2.65 million
– Ages 45 – 54: $12 million
– Ages 55 – 64: $14.5 million
– Ages 65+: $12 million
If you belong to any of these two categories, it is essential to seek tailored wealth management solutions that put your interests first. That’s precisely what we offer at Pillar Wealth Management. If you happen to be among high net worth individuals, click here to arrange a free consultation with us.
Where Do High Net Worth Individuals Hang Out?
So far, we have discussed who high net worth individuals are and the average net worth of people in the top 5% and 1% categories. Now, let’s tackle another question: Where do high net worth individuals hang out, and what do they do? It depends on their interests.
Most high net worth individuals and families enjoy such things as traveling, experiencing new places, or collecting art. You’ll find them hanging out on yachts, playing golf, skiing, or at art exhibitions. As far as hobbies go, high net worth individuals may like riding horses or collecting watches or other items they deem valuable. They tend to own residential properties in places like Boca Raton, Florida, Big Sky, Montana, Los Angeles, California, and more. Research suggests that these individuals are also six times more likely to shop at upscale apparel outlets, indulge in home renovations, and shop for furniture.
They also enjoy fine dining, and their most popular travel destinations include New Zealand, Australia, Oceania, Europe, and Asia.
What Do High Net Worth Individuals Need to Keep In Mind for Wealth Management?
Being rich isn’t all fun and play. High net worth individuals also have to work hard to sustain the lifestyle they desire and retire comfortably. If you happen to be a high net worth or ultra-high net worth investor, we recommend reading our guide on how to improve portfolio performance to make this happen.
Whether you are a part of the high net worth club or expect to enter it soon, we recommend all people with a sizeable number of liquid assets to keep the following in mind:
Make Smart Investment Choices
If you understand things like the time value of money, you’ll know that you need to invest your liquid assets to grow in value. Your investment choices mainly depend on your wealth management goals and your age.
At Pillar Wealth Management, we offer customized investment management that helps you achieve your goals. Still, to give you an overview of what smart investment choices entail, we recommend that you always diversify your investment portfolio. What does it mean to diversify? Diversification refers to investing your liquid assets across different capital assets to reduce your risk.
Each asset type represents a certain level of risk. Its performance is influenced by different variables. If you want to be a high net worth investor, it can be hard to avoid these risks altogether. What you can do is diversify your assets. This way, if a particular set of conditions hurts one asset type, they may not have the same impact on the other asset type.
There are 3 asset types you can invest in if you want to diversify. These are stocks, bonds, and cash. These assets behave differently from each other, and how you allocate your money among them can reduce the damage caused to your investment portfolio under less-than-ideal market conditions.
For instance, stocks offer high returns, but they are also very volatile. On the other hand, bonds are fixed-income securities that are less risky. The same applies to cash or cash equivalents. These assets have low returns, but they also help control your portfolio risk.
How do you decide which stocks or bonds to add to your investment portfolio, though? You work with a suitable financial advisor. Click here to read our guide on how to find a financial advisor for investors with over $10 million in liquid assets.
Control Your Costs
Cost control is an essential part of wealth management. You can earn high returns, but you could lose a significant sum of your profits to investment costs and taxes if you are not careful.
Some of the costs you need to watch out for here include:
– Capital gain taxes
– Costs of active vs. passive management
– Commissions
– Bond sale spread
– Internal expenses
– Tax-loss cultivation
– Service fee
Let’s elaborate on some of these costs to understand how they can affect your returns. Take capital gain taxes. There is a significant difference between the tax rate of short-term and long-term capital gains.
The tax rate for long-term capital gains is between 15% and 20% for high net worth investors. In comparison, short-term capital gains are taxed at 35% to 37%. So, if you are opting for active investing techniques to buy and sell assets within a year, you could lose a lot of money in taxes. At Pillar Wealth Management, we recommend balancing your short-term and long-term capital gains to increase your returns while controlling your tax burden.
Understanding how these costs work is also a great way of finding the right financial advisor. Most financial advisors are unable to tell you how much money you’ll be paying for investment management. This is mainly because they are unaware of hidden costs. Unfortunately, that lack of awareness can hurt your net worth.
If you want learn more about how to reduce these costs, we recommend ordering a free hardcover copy of our book – The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
Manage Your Risk
As we mentioned in an earlier section, all investments pose a certain amount of risk. Learning how to manage this risk is an essential part of wealth management. We already discussed diversification, but there is so much more you can do to control your risks.
For starters, we recommend working with a financial advisor who utilizes historical data for understanding market trends and can use this information to help build your portfolio. It also depends on how far back this historical data goes. Many financial advisors only have 20, 30, or 40 years of market data at hand.
However, a 30-year-old data set would not account for major events such as World War II or The Recession of 1953. Understanding how these events can impact your investment portfolio can make a big difference to your risk management.
At Pillar Wealth Management, we utilize data sets going back to 1925. We use this historical data to conduct portfolio stress tests that involve over 1,000 scenarios. This allows us to understand how your portfolio might suffer during an economic crisis and prepare countermeasures to minimize the impact.
If you want to learn more about risk management for high net worth individuals, click here to arrange a free consultation with us.
Stay Objective and Make Data-driven Decisions
High net worth individuals also opt for evidence-based investing over emotional investing. Evidence-based investing allows you to make investment decisions based on research, historical data, and education. On the other hand, emotional investing is driven by sentiments. For instance, if you hear any unpleasant news about a company’s CEO, you may assume this can impact the value of its stock. As an emotional investor, you may choose to sell this stock quickly to safeguard your investment.
Now, suppose you were right. The company’s stock price does dip briefly. However, two months later, the CEO announces his plans for expanding the company’s operations and exploring new regional markets. When this happens, the stock price rises again. If you sold your stock, you cannot capitalize on this increase in the stock price.
At Pillar Wealth Management, we keep a close eye on political changes and shifts in the economic conditions of the country. However, we also focus on market trends and the historical data we have at hand to make decisions that can protect your net worth.
Learning how to remain steadfast in the face of bad news is the mark of a good investor. Click here to learn more about other critical shifts you can make to improve your portfolio.
Get In Touch With Pillar Wealth Management Today
We hope you found this blog useful for understanding what high net worth individuals are. If you happen to be a part of the club, get in touch with us today.
Our team at Pillar Wealth Management has over 60 years of combined experience in wealth management. We believe that all high net worth individuals need specialized wealth management solutions that cater to their needs, account for risk, and increase their returns. If you are tired of the same cookie-cutter solutions offered by most other investment advisors, reach out to us for a free consultation. We can discuss your investment goals and prepare a portfolio that helps you lead the life you desire.
Click here to talk to one of our wealth managers today!
Frequently Asked Questions
What is considered a high-net-worth individual?
What is considered high net worth in 2022?
What is considered a rich net worth?
How many high net worth individuals are there in the US?
What is the difference between affluent and high-net-worth?
An affluent individual is simply wealthy, rich, or well-off and lives a comfortable lifestyle, whereas a high-net-worth individual has at least $1 million in liquid assets.
How many Americans are high net worth?
In 2021, there were 7.4 million HNWI in the United States, according to Statista.com, including such people as Alice Walton ($65 billion) and Jeff Bezos ($171 billion).
Where do the most high net worth individuals live?
There are more high net worth individuals in the United States than in any other country, followed by China, Germany, France, Canada, Japan, and India.
What is a good net worth in the USA?
A rule of thumb is to take your age, divide it by 10, and multiply that by your gross annual income. So, if you’re 60 years old and your income is $75,000, your net worth should be $450,000.
What is the average net worth of most Americans?
The average net worth for US households is $750,000, with a median of $121,000. The median for American households where the head of household is over 75 years old is $250,000.
What net worth is top 1 percent?
In the US, the net worth of the top 1% is $10,815,000.
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
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