High-net-worth individuals are experiencing an average wealth increase of 4.7%, according to recent findings from Capgemini Research. The study also reveals that the population of this group grew by 5.1% in 2023. Elias Ghanem, Global Head of Capgemini Research Institute for Financial Services, joins Wealth! to provide insight into these trends.
Ghanem identifies a significant shift in wealth management strategies among the affluent. “People are slowly but surely moving from wealth preservation… to wealth growth,” he observes.
Three key areas have emerged as focal points for investment strategies among the wealthy this year, according to Ghanem: real estate, alternative investments, and private equity. “We’re observing this quite a lot recently,” he tells Yahoo Finance, highlighting the move from “safe” to growth-oriented avenues.
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This post was written by Angel Smith
Video Transcript
High net worth.
Individuals globally are reaching unprecedented numbers and wealth levels wealth expanding by 4.7% in 2023 as the population of high net worth individuals rises 5.1%.
To shed light on what moves the ultra wealthy are making with their money, we have Elias Ganem, who is the global head of Cap Gemini Research Institute for Financial Services.
I mean, this is particularly interesting because one of the interesting kind of markers that I’ve heard at least and many out there who are paying attention is the number of millionaires that are being minted on a daily basis, whether in major cities like New York or elsewhere.
So how is that playing into the investment strategy and the returns for some of the ultra high net worth individuals out there?
In fact, it all started last year.
When we looked at the numbers last year, everybody went in wealth preservation.
Things were very confusing last year, so we saw all the numbers in total wealth and in total population of wealth going down.
And we saw the asset classes where you put your money depending on how you are.
Last year, you throw all your money in cash so you know what?
Let’s wait and see what’s happening.
What are you observing this year is cash.
Cash equivalent is down back to 25%.
Fixed deposits is building up, real estate is building up and alternative investment is building up.
People are slowly but surely moving from wealth preservation.
Let’s be safe to wealth growth.
And so that sounds like taking on a little bit more appetite for risk.
Potentially.
Where are some of the riskier elements of the portfolio that you are seeing being tapped into?
Right now?
It’s starting.
Let’s be realistic.
It’s early days.
People start looking at such a geopolitical environment so complex half of the global population going on election this year, all that and then all the wars that are happening, left and right.
Unfortunately, all that makes people quite a little bit careful.
But on the other side, tech stock market is doing very well, so there are bets, people are making bets and we have been observing that in our report that people are starting to say we are starting to do some bets and investing in some opportunities.
There were some of these individuals or households that were able to invest at times and other people needed to pull money out of the market.
And and I think back to the covid pandemic when we saw the massive dip, of course, the bottoming out in late March of 2020 ultimately a heavy buying back in action when it felt like, OK, at this level, we need to put some of this cash back to work.
That’s an opportunity that not a lot of other people had.
But where did some of the wealthier individuals and households buy into at that time that helps solidify wealth and returns even further?
Three categories.
Uh, real estate alternative investments in terms of private equity and some investment into Bitcoins and cryptocurrencies at different scales.
Real estate.
We had high interest rate so logically people start buying houses, so the market went down.
If you have the cash, that’s the right time to do it.
Logically.
Private equity ultra high net force individual have a long term view and are able to make bets on a much longer term.
And by the way, we are in such a transformation of the economy from to renewable economy that there are bets to be made.
And in Cryptocurrency, depending on how the Bitcoin goes up and down people are interested.
We are observing that quite a lot recently.
Cap Gemini Research Institute.
Elias Gam.
Thanks so much for taking the time here with us today.
Thank you so much for having me here.
