The richest 1 per cent: what you’ll need, and is it really worth it?

The assets that are required to rank among the richest 1 per cent of Australians has doubled in just two short years. What you now need to join this cohort may be surprising.

I remember growing up hearing stories from my working class parents about “how the other half live”. You know, that 50 per cent or more of the Aussie population who were much, much wealthier than my family and enjoying their fancy homes, flashy cars and luxurious lives.

Later on, the top 10 per cent seemed to be the number used to describe wealthy Australians – usually measured by their net worth. If you were in the top 10 per cent, you were doing very nicely thank you very much.

But now, it seems the percentages are shrinking even further, and wealthy people seem to be the top 1 per cent only, based on a report I received last week.

The latest Wealth Report update by global real estate group Knight Frank looked at what it takes to be among the top 1 per cent by net worth, and it’s scary reading for the other 99 per cent of the population.

The money needed to be in the wealthiest 1 per cent doubled in two years. Picture: iStock

Knight Frank says the amount of money needed to hit the 1 per cent milestone in Australia has doubled in the past two years, and now sits at $US5.5 million ($8.3 million) of net wealth. We’re ranked third globally behind Monaco and Switzerland, while New Zealand and the US are in fourth and fifth – both requiring at least $US5 million per person.

The wealthiest Australians typically own about three homes, and the vast majority of their wealth remains in this country, the report says. Commercial property and shares are other big asset holdings.

Now, most people I know don’t have a lazy $8 million of assets up their sleeves, and studies have shown that such high levels of wealth can cause more problems for people – or at least that’s what we like to tell ourselves.

Look at how many lottery winners win millions of dollars then blow it all because they could never get used to such huge amounts of money. Look at the huge and unsavoury family fights – often among the wealthiest families – as greed drives people to chase an extra million, ripping off their siblings or whoever else gets in their way.

True wealth comes from having a comfortable and healthy life, with loving friends and family, and enough money to avoid having to stress about how the bills get paid.

The financial figure to achieve that varies wildly between individuals based on their spending habits, home values and what they like to do in their spare time. For example, when holidaying are you a Mount Kosciuszko person or an Aspen Mountain person?

Australians’ retirement savings provide an idea of wealth levels, and they’re a lot lower than $8 million. Average super balances are around $165,000 for men and $130,000 for women, while for people aged 60 to 64 they’re $360,000 and $289,000 respectively.

Anyone desperate to be in the top 1 per cent can always consider moving overseas. Knight Frank’s research shows the top 1 per cent of people in India hold at least $US175,000 ($264,000) of wealth, in the Philippines it’s $US57,000 ($86,000) and in Kenya it’s $US20,000 ($30,000).

For the rest of us, perhaps aim to be in the top 50 per cent, or top 20 per cent, and instead seek true wealth from relationships, staying healthy, enjoying experiences and seeking financial security rather than financial dominance.

Originally published as The richest 1 per cent: what you’ll need, and is it really worth it?