Key takeaways
- A high-net-worth individual is typically defined as someone who has liquid assets of between $1 million and $5 million, although there’s no firm definition of the amount as some institutions may define the range differently.
- High-net-worth individuals often bank with private banks or wealth management firms and may have access to additional services beyond banking and investing.
- Net worth is calculated by adding up assets and subtracting liabilities, and can include real estate and investment accounts.
- Becoming a high-net-worth individual takes hard work and smart financial management, but anyone can improve their financial standing through budgeting and saving strategies.
A high-net-worth individual, or HNWI, might be defined differently among certain financial institutions. But in all cases, a high-net-worth individual is someone with a large amount of wealth.
Typically, a high-net-worth individual has assets of between $1 million and $5 million. Those with multi-million dollar fortunes, generally assets of at least $30 million, are sometimes identified as ultra-HNWI (UHNWI). The term “net worth” factors in liquid or investable assets.
High-net-worth individuals often bank at a private bank or with a wealth management firm.
At both types of institutions, high-net-worth individuals may be offered additional services beyond banking and investing. These can include trust services and estate planning, often using a team approach.
How net worth is calculated
A person’s net worth is determined by adding the person’s assets and subtracting any liabilities.
Rick Zimmerman, former senior vice president of private banking and commercial lending at Capitol Bank in Madison, Wisconsin, now retired, notes that assets include:
Regarding real estate, the mortgage balance subtracted from the value of your home counts toward your net worth.
“In the investment world [a high-net-worth individual] generally refers to liquid assets,” says Pamela Chen, CPA, CFA, chief investment officer at Refresh Investments LLC in Santa Monica, California. “So it would be investment accounts and banking accounts.”
What are the benefits of being a high-net worth individual?
As a high-net-worth individual you might be able to get higher annual percentage yields (APYs) on your savings account. You’ll likely qualify for lower rates on loans and might have access to unique products or services. You might also have a representative and team that works with you.
HNWI key statistics
The 14th Global Wealth Report from UBS projects that global wealth will increase by more than a third (38 percent) in the next four years. (The report defines ultra-high-net-worth individuals as those with $50 million or more in liquid assets.)
Insights from this report include:
- Global wealth declined in 2022. It’s the first reduction in global wealth since 2008.
- The report projects there will be 86 million millionaires and 372,000 UHNWIs by 2027.
How do you become a high-net-worth individual?
Becoming a high-net-worth individual could take many years. In most cases, hard work, saving and investing play a significant role.
Or under the right circ*mstances, such as these, it could almost happen overnight.
- Inheritance
- Winning the lottery or other prize
- Life insurance
- Winning a lawsuit
- Getting married
- Selling a business
- Capital gain
- Earning a very high salary or bonus
While most people likely won’t be considered high-net-worth individuals, just about anyone can use smart budgeting and saving strategies to improve their financial status over time.
Bottom Line
In today’s society, high-net-worth individuals are generally defined as those with a net worth of between $1 million and $5 million, and often have access to financial services beyond traditional banking and investing services at commercial banks and credit unions. In most cases, becoming a high-net-worth individual takes hard work, saving and smart financial management, but with determination and the right circ*mstances, it’s possible. While not everyone may reach this status, anyone can improve their financial standing through various budgeting and saving strategies.
FAQs
Typically, a high-net-worth individual has assets of between $1 million and $5 million. Those with multi-million dollar fortunes, generally assets of at least $30 million, are sometimes identified as ultra-HNWI (UHNWI). The term “net worth” factors in liquid or investable assets.
What qualifies as a high net worth individual? ›
A high-net-worth individual (HWNI) is an individual who generally has liquid assets of at least $1 million after accounting for their liabilities. 1 The term HNWI is commonly used within the financial industry to identify individuals who need tailored financial and money management services.
What is a high net worth individual wealth? ›
High-net-worth individual (HNWI) references individuals who maintain liquid assets at or above a certain threshold. Typically, these individuals are defined as holding financial assets (excluding their primary residence) with a value over US$1 million.
What is a certified high net worth individual? ›
Currently, the financial thresholds to qualify as a high net worth individual are to have received income of £100,000 in the previous financial year, or to have £250,000 worth of net assets throughout the previous financial year.
Is a net worth of $400,000 good? ›
People tend to underestimate “high net worth,” citing $400,000 as the median average, which is significantly less than the broadly accepted definition of a HNWI: someone with at least $1 million in liquid assets. Getting clarity on your net worth is an important step toward financial wellbeing.
What is the net worth of the top 2% of Americans? ›
Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.
At what net worth are you considered rich? ›
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
What net worth puts you in the top 5%? ›
The most recent data from the Fed's Survey of Consumer Finances took a snapshot of the American public at the end of 2022. At that point, a net worth of $3,795,000 was enough to put you in the top 5% of all American households.
What net worth puts you in the top 1%? ›
The top 1% of household net worth in the U.S. was just shy of $13.7 million in 2023. An individual would have to earn an average of $407,500 per year to join the top 1%. A household would need an income of $591,550. The median household income was $74,580 in 2023 and $45,440 for individuals.
What net worth is considered upper class? ›
The upper class has an average net worth of $793,120 to $2.65 million, while the lower class has $16,900. The middle class ranges from $58,550 to $300,800. You can grow your net worth by saving and investing consistently, investing in the stock market, and being careful about taking on debt.
A high-net-worth individual is typically defined as someone who has liquid assets of between $1 million and $5 million, although there's no firm definition of the amount as some institutions may define the range differently.
What is a respectable net worth? ›
Determining what your net worth should be at any age can be a bit tricky, and it depends on your income. Say you're 30 years old and your income is $50,000 per year. Your net worth should be $150,000, according to this formula. A $25,000 salary at age 30 would mean an ideal net worth of $75,000.
What is the limit for high-net-worth individuals? ›
Who Are High Net Worth Individuals (HNIs)? A high net-worth individual (HNI) falls under the category of investors in the Indian stock market. Individual investors exceeding its net worth value of Rs. 5 crore are categorised under high-net-worth individuals in India.
What salary is upper middle class? ›
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
What percentage of retirees have $3 million dollars? ›
Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.
How many people have $2000000 in savings? ›
Per the Federal Reserve about 6% of households have over $2,000,000 in wealth in 2020. Only 9% of Americans make over $100,000/yr. so, it is a relatively small percentage. As for savings, for those over 60, if they have been frugal and saved, they may have over a million dollars.
What is the net worth of the upper 1%? ›
In the U.S., it may take you $5.81 million to be in the top 1%, but it takes a minimum net worth of $30 million to be considered among the ultra-high net worth crowd. As of the end of 2023, this ultra-high net worth population is on the rise, reaching 626,000 globally, up from just over 600,000 a year earlier.
What is a good net worth for a person? ›
Determining what your net worth should be at any age can be a bit tricky, and it depends on your income. Say you're 30 years old and your income is $50,000 per year. Your net worth should be $150,000, according to this formula. A $25,000 salary at age 30 would mean an ideal net worth of $75,000.
How many American households have a net worth of $2 million? ›
About 16 million American families—just over 12%—have wealth exceeding $1 million, up from 9.8 million families in 2019. Nearly eight million families are multimillionaires, i.e., their wealth exceeds $2 million, up from 4.7 million.
