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 bit.
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 principal residence.
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.
As well, this tiny group of ultra wealthy households earns 22% of total income, up from 8% in the 1970s.
The $88 Trillion World Economy in One Chart
The world’s total GDP crested $88 trillion in 2019—but how are the current COVID-19 economic contractions affecting its future outlook?
The $88 Trillion World Economy in One Chart
The global economy can seem like an abstract concept, yet it influences our everyday lives in both obvious and subtle ways. Nowhere is this clearer than in the current economic state amid the throes of the pandemic.
Editor’s note: Annual data on economic output is a lagging indicator, and is released the following year by organizations such as the World Bank. The figures in this diagram provide a snapshot of the global economy in 2019, but do not necessarily represent the impact of recent developments such as COVID-19.
Top 10 Countries by GDP (2019)
In the one-year period since the last release of official data in 2018, the global economy grew approximately $2 trillion in size—or about 2.3%.
The United States continues to have the top GDP, accounting for nearly one-quarter of the world economy. China also continued to grow its share of global GDP, going from 15.9% to 16.3%.
|Rank||Country||GDP||% of Global GDP|
|Top 10 Countries||$58.7 trillion||66.9%|
In recent years, the Indian economy has continued to have an upward trajectory—now pulling ahead of both the UK and France—to become one of the world’s top five economies.
In aggregate, these top 10 countries combine for over two-thirds of total global GDP.
2020 Economic Contractions
So far this year, multiple countries have experienced temporary economic contractions, including many of the top 10 countries listed above.
The following interactive chart from Our World in Data helps to give us some perspective on this turbulence, comparing Q2 economic figures against those from the same quarter last year.
One of the hardest hit economies has been Peru. The Latin American country, which is about the 50th largest in terms of GDP globally, saw its economy contract by 30.2% in Q2 despite efforts to curb the virus early.
Spain and the UK are also feeling the impact, posting quarterly GDP numbers that are 22.1% and 21.7% smaller respectively.
Meanwhile, Taiwan and South Korea are two countries that may have done the best at weathering the COVID-19 storm. Both saw minuscule contractions in a quarter where the global economy seemed to grind to a halt.
Projections Going Forward
According to the World Bank, the global economy could ultimately shrink 5.2% in 2020—the deepest cut since WWII.
See below for World Bank projections on GDP in 2020 for when the dust settles, as well as the subsequent potential for recovery in 2021.
|Country/ Region / Economy Type||2020 Growth Projection||2021E Rebound Forecast|
|East Asia and Pacific||-0.5%||6.6%|
|Europe and Central Asia||-4.7%||3.6%|
|Latin America and the Caribbean||-7.2%||2.8%|
|Middle East and North Africa||-4.2%||2.3%|
Source: World Bank Global Economic Prospects, released June 2020
Ranked: The World’s Richest Families in 2020
Who’s the richest of them all? Here’s a look at the 25 wealthiest families in the world, and the companies that kickstarted their empires.
The World’s Richest Families in 2020
The COVID-19 pandemic hasn’t stopped the world’s wealthiest families from growing their fortunes. Over the past year, the richest family—the Waltons—grew their wealth by $25 billion, or almost $3 million per hour.
This graphic, using data from Bloomberg, ranks the 25 most wealthy families in the world. The data excludes first-generation wealth and wealth controlled by a single heir, which is why you don’t see Jeff Bezos or Bill Gates on the list. Families whose source of wealth is too diffused or opaque to be valued are also excluded.
The Full Breakdown
Intergenerational wealth is a powerful thing. It often prevails through market crashes, social turmoil, and economic uncertainty, and this year has been no exception.
Here’s a look at the 25 most wealthy families in 2020:
|1||Walton||Walmart||215||Consumer services||🇺🇸 Bentonville, Arkansas|
|2||Mars||Mars||120||Consumer goods||🇺🇸 McLean, Virginia|
|3||Koch||Koch Industries||109.7||Industrials||🇺🇸 Wichita, Kansas|
|4||Al Saud||N/A||95||Industrials||🇸🇦 Riyadh, Saudi Arabia|
|5||Ambani||Reliance Industries||81.3||Industrials||🇮🇳 Mumbai, India|
|6||Hermès||Hermès||63.9||Consumer services||🇫🇷 Paris, France|
|7||Wertheimer||Chanel||54.4||Consumer services||🇫🇷 Paris, France|
|8||Johnson (Fidelity)||Fidelity Investments||46.3||Financials||🇺🇸 Boston, New York|
|9||Boehringer, Von Baumbach||Boehringer Ingelheim||45.7||Health care||🇩🇪 Inglheim, Germany|
|10||Albrecht||Aldi||41||Consumer services||🇩🇪 Rhineland, Germany|
|11||Thomson||Thomson Reuters||40.6||Communication||🇨🇦 Ontario, Canada|
|12||Hoffmann, Oeri||Roche||38.8||Health care||🇨🇭 Basel, Switzerland|
|13||Mulliez||Auchan||38.4||Consumer services||🇫🇷 Lille, France|
|14||Cargill, MacMillan||Cargill||38.1||Industrials||🇺🇸 Minneapolis, Minnesota|
|15||Johnson (SC)||SC Johnson||37.3||Consumer services||🇺🇸 Racine, Wisconsin|
|16||Van Damme, De Spoelberch, De Mevius||Anheuser-Busch InBev||36.8||Consumer goods||🇧🇪 Belgium|
|17||Quandt||BMW||34.7||Consumer services||🇩🇪 Munich, Germany|
|18||Cox||Cox Enterprises||33.1||Communication||🇺🇸 Atlanta, Georgia|
|19||Rausing||Tetra Laval||32.9||Materials||🇬🇧 London, England|
|20||Newhouse||Advance Publications||31||Communication||🇺🇸 New York, New York|
|21||Chearavanont||Charoen Pokphand Group||30.7||Diversified||🇹🇭 Bangkok, Thailand|
|22||Ferrero||Ferrero||30.5||Consumer goods||🇮🇹 Alba, Italy|
|23||Kwok||Sun Hung Kai Properties||30.4||Real estate||🇭🇰 Hong Kong|
|24||Pritzker||Hyatt Hotels||29.6||Consumer services||🇺🇸 Chicago, Illinois|
|25||Lee||Samsung||29||Diversified||🇰🇷 Seoul, South Korea|
*Note: The Al Saud’s net worth is based on cumulative payouts royal family members were estimated to have received over the past 50 years.
The Waltons are the richest family on the list by far, with a net worth of $215 billion—that’s $95 billion more than the second wealthiest family. Sam Walton, the family’s patriarch, founded Walmart in 1962. Since then, it’s become the world’s largest retailer by revenue.
When Sam passed away in 1992, his three children—James, Alice, and Rob—inherited his fortune. Now, the trio co-owns about half of Walmart.
In second place is the Mars family, with a net worth of $120 billion. The family is well-known for their candy empire, but interestingly, about half of the company’s value comes from pet care holdings. Mars Inc. owns several popular pet food brands, including Pedigree, Cesar, and Royal Canin—and it expanded its pet presence further in 2017 when it acquired VCA, a company with almost 800 small animal vet hospitals across the U.S. and Canada.
The Koch family is the world’s third-richest family. Their fortune is rooted in an oil firm founded by Fred C. Koch. Following Fred’s death in 1967, the firm was inherited by his four sons—Frederick, Charles, David, and William. After a family feud, Frederick and William left the business, and Charles and David went on to build the mega industrial conglomerate known as Koch Industries.
Despite being affected by the oil crash this year, the Koch family’s wealth still sits at $109.7 billion. Before David’s passing in 2019, he and his brother Charles were heavily involved in politics—and their political efforts were the subject of much scrutiny.
Richest Families, by Sector
It’s important to note that many of these families have diversified their investments across a variety of industries. For instance, while the Koch family’s wealth is largely concentrated in the industrial sector and commodities, they also dabble in real-estate—in May 2020, they made a $200 million bet on U.S. rental homes.
That being said, it’s interesting to see where each of these families started, and which sectors have bred the highest number of ultra-wealthy families.
Here’s a breakdown of each sector and how many families on the list got started in them:
|Sector||Number of Families||Total Wealth, $B|
The top sector is consumer services—8 of the 25 families are heavily involved in this sector. Walmart helped generate the most wealth out of families in this space, while luxury brands Hermès and Chanel were the source of fortune for the next two wealthiest families.
Industrial is the second largest sector, with 4 of the 25 families involved. It’s also one of the most lucrative sectors—out of the top five wealthiest families on the list, three are in industrials. The Koch family is the wealthiest family in this category, followed by the Al Saud family and the Ambani family, respectively.
Communications and consumer goods are tied for third, with 3 of the 25 families in each. The Thomsons, who founded Thomson Reuters, are the wealthiest family in communications, while the Mars family has the highest net worth in the consumer goods sector.
Resilient, but not Bulletproof
Despite a global recession, most of the world’s wealthiest families seem to be doing just fine—however, not everyone on the list has been thriving this year.
The Koch family’s fortune dropped by $15 billion from 2019 to 2020, and the current political climate in Hong Kong has had a negative impact on the Kwok family’s real estate empire.
While intergenerational wealth certainty has resilience, how much economic and social turmoil can it withstand? It’ll be interesting to see which families make the list in 2021.
Technology1 month ago
The World’s Tech Giants, Ranked by Brand Value
Maps2 months ago
Animated Map: The History of U.S. Counties
Technology1 month ago
AIoT: When Artificial Intelligence Meets the Internet of Things
Energy2 months ago
Connected Workers: How Digital Transformation is Shaping Industry’s Future
Technology3 weeks ago
Visualizing the Social Media Universe in 2020
Technology3 weeks ago
Ranked: The Most Popular Websites Since 1993
Politics2 months ago
How Much Do Countries Spend on Healthcare Compared to the Military?
Markets2 months ago
Understanding the Disconnect Between Consumers and the Stock Market