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 (HNWI) is someone who generally has liquid assets of at least $1 million after accounting for their liabilities.
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.
What is top 5% wealth net worth in the US? ›
The most recent data from the Fed's Survey of Consumer Finances comes from the end of 2022. If you wanted to be in the top 5% of households at that point, you would need a net worth of $3,795,000. As you might expect, though, you don't need as much to reach the top 5% of younger households.
What percentile is a $3 million net worth? ›
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
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 net worth is considered wealthy? ›
In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.
What is the cutoff for high-net-worth individual? ›
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 is an example of a high-net-worth individual? ›
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. These individuals are mostly business owners, corporate executives, entrepreneurs and more.
What is a respectable net worth? ›
Net worth is the difference between the values of your assets and liabilities. The average American net worth is $1,063,700, as of 2022. Net worth averages increase with age from $183,500 for those 35 and under to $1,794,600 for those 65 to 74. Net worth, however, tends to drop for those 75 and older.
There are estimated to be a little over 8 million households in the US with a net worth of $3 million or more.
What net worth puts you in the top 2 percent? ›
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
What net worth is considered upper middle class? ›
Upper-Middle Class (Next 20%): The median net worth is $201,800. This group often enjoys more discretionary income and benefits from long-term investments. Wealthy (Top 20%): The median net worth is $608,900. This group often represents older individuals who have accumulated significant savings and investments.
Does net worth include home? ›
Key Takeaways. Net worth is a measure of what you own minus what you owe. It's calculated by subtracting all of your liabilities from all of your assets. In addition to your home, key assets include investments, automobiles, collectibles, and jewelry.
What percentage of US citizens have a net worth over $3 million? ›
According to the MacroMonitor, by 2022-23, the number of U.S. households with $3 million or more in financial assets represents 3.2% of all households, totaling 4.6 million.
What net worth is considered rich in Forbes? ›
You Need More Than $2.2 Million To Be Considered Rich In The U.S.—But Some Say 'Well-Being' Is The Most Important Measure Of Wealth, Study Finds.
What net worth qualifies as top 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.
How many people have $10 million dollars? ›
There are approximately 584,000 US$ multimillionaires who have net assets of $10M+ worldwide in 2017. Roughly 1.5% of US$ millionaires are "ultra-high-net-worth individuals" (ultra-HNWIs), defined as those with a net worth or wealth of $30 million or more.
How many people have 300 million? ›
According to Global Rich List, $300M would instantly make the recipient the 5,393rd wealthiest person on Earth. Among the top 0.0001% richest people alive, anywhere. That's 'one millionth of one percent'.