(best to go to above citation and see the charts etc.)
How the Composition of Wealth Differs, from the Middle Class to the Top 1%Published 1 day ago on May 8, 2019 By Nick Routley
Visualizing the Composition of Wealth, from the Middle Class to the Top 1%
A Breakdown of Wealth, from Middle Class to the Top 1%
Just as household wealth varies greatly across the population, the
composition of that wealth changes as well. Simply put, the person next
to you at the grocery store will likely have a much different asset mix
than, say, Warren Buffett.
Today’s chart breaks down the differences in the composition of wealth between middle income, upper income, and ultra wealthy (top 1%) of
American households to help us better understand the building blocks
that make up net worth. Let’s dive in.
Middle Income: Home is Where the Wealth is
It’s no surprise that the principal residence is the cornerstone of net
worth for most Americans in the middle class. For households that fall
in this wide range ($0 to $471k of net worth) the combination of housing
and pension accounts make up nearly 80% of total wealth on average.
Assets like stocks and mutual funds only make up about 4% of wealth in
this income bracket, partially mirroring the trend of lower stock market participation in recent years.
As we move up the income ladder, however, this situation changes quite a
Upper Income: A Diversified Portfolio
If a household has a net worth that ranges between $471,000 and $10.2
million, it is considered to fall in the upper income band above. This represents the 20% richest households in the U.S., minus the top 1%,
which are put in a separate bracket.
For this group, the principal residence makes up a smaller slice of the
wealth pie. Instead, we see a higher mix of financial assets like stocks
and mutual funds, as well as business equity and real estate. Almost
half of households in this group own real estate in addition to their
As households become wealthier, we tend to see a lower share of liquid
assets as compared with the other components of net worth.
The Top 1%: The Business Equity Bulge
In the richest 1% of households, the principal residence makes up a mere
7.6% of assets. At this stage, almost half of assets fall under the
category of business equity and real estate.
A prime example of this is Jeff Bezos. The lion’s share of the Amazon founder’s net worth is tied to the value of his company. Another example
is President Trump, whose sprawling real estate empire comprises
two-thirds of his estimated $3.1 billion net worth.
One of the more prominent features of the ultra rich wealth bracket is a
much higher level of financial asset ownership. In fact, the top 1% of households own over 40% of stocks.
stock ownership by wealth bracket
As well, this tiny group of ultra wealthy households earns 22% of total
income, up from 8% in the 1970s.
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RELATED TOPICS:HOUSEHOLD WEALTHTHE 1%WEALTH COMPOSITION
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