High-Net-Worth Individuals in Australia — Understanding Their Success

Australia’s number of high-net-worth individuals has grown exponentially in recent times, leading to more people questioning how they can grow their wealth and achieve their biggest financial goals. 

If you’re looking to better understand the success of Australia’s wealthiest individuals, our team can help. We will discuss everything you need to know about high-net-worth individuals, the financial thresholds they have to meet, and how they invest their money to achieve their status.

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Who is Considered a High Net-Worth Individual?

Officially, there is no formal criteria you have to meet to be considered a high-net-worth individual (HNWI) in Australia. However, financial professionals across the country have developed their own criteria to help categorise the nation’s wealthiest people. Depending on the value of their liquid assets, these wealthy individuals may fall into any one of the following three categories:

  • High-net-worth-individuals
  • Very-high-net-worth individuals
  • Ultra-high-net-worth individuals
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High-Net-Worth Individuals

For a person or household to be considered high-net-worth in Australia, they will need to have a net worth between $1 million and $5 million in liquid assets alone. Generally, tangible assets such as your home and vehicle are excluded from your net worth, as they are usually harder to sell, and their value is typically much more volatile.

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Very-High-Net-Worth Individuals

The next category is reserved for very-high-net-worth individuals. In order for a person or household to fit into this category, their net worth will have to include liquid assets between $5 million and $30 million.

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Ultra-High-Net-Worth Individuals

People or households with a net worth that includes $30 million or more in liquid assets are considered ultra-high-net-worth individuals. This category is reserved for Australia’s highest class of wealthy citizens.

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Considering Your Liabilities

We now know that in order to be considered a high-net-worth individual, your net worth needs to include liquid assets that have a collective value of at least $1 million. However, your assets aren’t the only things that contribute towards your status as a high-net-worth individual. Once you have calculated the value of your liquid assets, you will need to then deduct all your financial liabilities from this figure to determine your net worth.

For example, let’s say you have $1 million in liquid assets, but you also have financial liabilities totalling $100,000. Once you deduct your liabilities from your assets, your net worth would sit at $900,000, meaning you would not quite meet the criteria for a high-net-worth individual. Financial liabilities can include but are not limited to the following:

  • Outstanding mortgage balance
  • Vehicle loan balance
  • Student loan/HELP debt
  • Personal loans
  • Credit card debt
  • Buy Now Pay Later debt
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How Many Ultra-High-Net-Worth Individuals Are There in Australia?

The most recent report from Statista reveals that there were 20,874 ultra-high-net-worth individuals in Australia in 2021. This report also indicated that this figure is projected to rise to 27,330 by 2026. 

The country’s strong economy has played a large role in the increased number of ultra-high-net-worth individuals in Australia. The nation’s consistent economic growth and social stability have generated many opportunities for businesses and investors to create and accumulate their wealth over the years. In turn, this has allowed more and more wealthy Australians with incredible financial discipline to reach ultra-high-net-worth status.

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Where Do High-Net-Worth Individuals Invest Their Money?

When it comes to understanding the success of high-net-worth individuals, their investments cannot be overlooked. Their exorbitant wealth means they have a range of investment options available to them, including hedge funds, private equity, and other investments that are unavailable to the general public.

While these additional investment opportunities are exclusive to high-net-worth individuals, it’s important to remember that many of these people started out with the same options as any other investor. If you’re just starting out on your investment journey and are aiming to grow your wealth to become a high-net-worth individual, there are a few different strategies you can follow.

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Start Early and Remain Consistent

The earlier you start investing, the more time your money has to grow. After you have reviewed your financial situation, outlined your goals, and researched your investment options, there’s no time like the present to begin investing.

Once you have begun, it’s important to remember that consistency is key, as regular contributions to your investment portfolio can help you build even more wealth over time.

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Diversify Your Portfolio

Any successful investor will tell you that building a diverse portfolio is one of the best strategies you can use to grow your wealth. This strategy involves investing in a mix of asset classes, such as different stocks, bonds, and real estate, to reduce financial risk and maximise your returns.

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Seek Professional Advice

Another way to increase your chances of becoming a high-net-worth individual is by seeking advice from a financial advisor. A financial advisor will help you make informed investment decisions and can develop a personalised investment strategy based on your goals and risk tolerance.

Once you have established your investment strategy, it can also be a good idea to work with a professional funds management firm. If you are just starting your investment journey, a funds management firm will allow you to invest your money with all the skills and experience of a professional investor.

 At EC Pohl & Co, we have a team of seasoned investors who will use their expertise to make the best investment decisions for you. We will provide you with a diversified, low-risk portfolio that will give you the best chances of achieving your financial goals.

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