Financial assets should be a key part of each household’s wealth
Most families still focus on home ownership alone as the means of increasing their net worth, writes Kevin Lings
Home ownership is the main savings vehicle for many people around the world. Yet the biggest growth in wealth over the past few years has come from financial assets such as shares and bonds, not from nonfinancial assets like houses. In the past 15 years global household wealth rose 125% in US dollars to reach a record $280.3-trillion in 2017. This equates to an average annual growth rate of 5.6%, including the impact of the global financial market crisis, which cut household wealth 12.6% in 2008. The rate of increase in global wealth has easily outstripped population growth and inflation over the past 15 years, Put simply, the global household sector is the wealthiest it has ever been. Household wealth is influenced by three factors. The first, obviously, is that a surge in debt can quickly undermine the net worth of any household, especially if the debt is being used to fund consumer spending rather than to buy an asset such as a vehicle or residential property.
The second co...
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