Post by oldman on Oct 20, 2013 4:58:50 GMT 7
HNWI is defined as individuals with investible assets of over a million dollars. Investible assets are assets that one can utilise and excludes the primary residence. My understanding is that they do not take into consideration whether or not the primary residence is still under a loan. If this is the case, the perceived millionaire status is very dependent on a buoyant property market.
The purpose of the data is probably for wealth management companies to size up the opportunities in each country (as I don't think wealth managers worry too much if you take loans in order to achieve your paper millionaire status as all they want to do is to invest your money and charge you for the service) but instead, some folks take the raw data and write a story without first stating clearly the assumptions of the data.
Yes, if you can borrow a million dollars against your primary residence, you are considered as someone with an investible asset of a million dollars... and a HNWI and a millionaire! This is not difficult as many private residences are worth well over a million dollars.
Hence, we should not read too much into the data and certainly we should not equate HNWI with real millionaires.... these are folks who truly have at least $1 mil of liquid assets minus the house they stay in and certainly minus the loan on their primary residence. As this type of data is very difficult to obtain, the research companies rather go for the easier to get data... that of HNWI.
Personally, I think that the term High Net Worth Individuals is a misnomer. The later term suggests that these individuals are of high net worth but reality is that HNWI is not actually measuring net worth as it does not take into consideration the loans that these individuals may have taken on their primary residence. After all, net worth is defined as the amount by which assets exceed liabilities. If one does not consider liabilities, one should not use the term net worth.
Perhaps a better descriptive term is High Investible Asset Individuals but of course, this term may not sound as impressive.
As always, please feel free to offer a different opinion.
news.xin.msn.com/en/singapore/article.aspx?cp-documentid=4363299
The purpose of the data is probably for wealth management companies to size up the opportunities in each country (as I don't think wealth managers worry too much if you take loans in order to achieve your paper millionaire status as all they want to do is to invest your money and charge you for the service) but instead, some folks take the raw data and write a story without first stating clearly the assumptions of the data.
Yes, if you can borrow a million dollars against your primary residence, you are considered as someone with an investible asset of a million dollars... and a HNWI and a millionaire! This is not difficult as many private residences are worth well over a million dollars.
Hence, we should not read too much into the data and certainly we should not equate HNWI with real millionaires.... these are folks who truly have at least $1 mil of liquid assets minus the house they stay in and certainly minus the loan on their primary residence. As this type of data is very difficult to obtain, the research companies rather go for the easier to get data... that of HNWI.
Personally, I think that the term High Net Worth Individuals is a misnomer. The later term suggests that these individuals are of high net worth but reality is that HNWI is not actually measuring net worth as it does not take into consideration the loans that these individuals may have taken on their primary residence. After all, net worth is defined as the amount by which assets exceed liabilities. If one does not consider liabilities, one should not use the term net worth.
Perhaps a better descriptive term is High Investible Asset Individuals but of course, this term may not sound as impressive.
As always, please feel free to offer a different opinion.
news.xin.msn.com/en/singapore/article.aspx?cp-documentid=4363299