While it is a fact that the ultra-rich control a disproportionate amount of the world’s wealth, there are common misconceptions about how they accumulated and spend their fortunes.
There are 211,275 ultra high-net-worth (UHNW) individuals in the world who each have net assets of $30 million or more, according to a report by Wealth-X and UBS. These super-rich individuals account for only 0.004% of the world’s adult population but control almost 13% of the world’s wealth. The wealthiest 62 people in the world, meanwhile, have a combined net worth of $1.72 trillion and control 50% of the world’s wealth, according to data compiled by Wealth-X.
Here are the top four-biggest myths about the ultra-wealthy, according to Wealth-X. (For related reading, see: Assets the Ultra-Rich Use for Reducing (or Avoiding) Taxes.)
The first common misconception about the super-rich is that they all inherited their wealth. In fact, one of the primary characteristics of this population is entrepreneurship. Almost 64% are self-made. Only 17.4% inherited their fortunes and 18.8% have a combination of both self-made and inherited wealth, said Wealth-X.
It is also commonly perceived that the ultra wealthy don’t give back. In 2014 philanthropic giving among the world’s ultra wealthy reached $112 billion, which is the equivalent to the gross domestic product (GDP) of Morocco, a report on philanthropy by Wealth-X and Arton Capital points out.
The typical ultra high-net-worth philanthropist donates $28.7 million in his or her lifetime and 65% of ultra high-net-worth individuals donate more than $1 million throughout their lifetimes. India has the most generous ultra wealthy donors (based on absolute value of total donations) followed by the U.K. and Hong Kong. When based on donations as a percentage of net worth, the U.K. has the most generous donors. The U.S. and Hong Kong follow.
The report also found that one in 28 UHNW individuals have donated money toward alleviating the global refugee crisis, for a total of $2.7 billion. (For related reading, see: Characteristics of the Ultra Wealthy.)
The third myth about the ultra wealthy is that they allocate a large proportion of their assets to owning trophy properties around the world.
UHNW tend to own fewer homes than their wealthier billionaire counterparts. UHNW individuals own 2.7 properties on average and hold more than 8% of their net worth in real estate assets. Wealthy women tend to hold more real estate assets than men. On average they hold of $20 million in real estate, compared to $14 million for their male counterparts.
Real estate makes up 3% of billionaires’ net worth. The typical billionaire owns four properties.
Most (79%) of the world’s UHNW individuals own two or more residences and for the majority, their primary and secondary homes are in the same country. (For related reading, see: Biggest Tax Issues Facing High-Net-Worth Individuals.)
The final myth is that the ultra wealthy all graduated from Ivy League schools. While certain universities are popular among the ultra wealthy, the top 10 universities by UHNW alumni population make up just 5% of the world’s college educated UHNW individuals. Of the top 10 schools with ultra wealthy alumni, five are Ivy League: Harvard University, University of Pennsylvania, Columbia University, Yale University and Cornell University. The other schools in the top 10 are Stanford University, New York University, Massachusetts Institute of Technology, University of Chicago and Northwestern University.
Almost all (88%) of UHNW individuals hold a bachelor’s degree. Wealth-X points out though that this also indicates that 12% of the world’s ultra wealthy have not continued their education beyond high school or dropped out in college.
The Bottom Line
Contrary to popular belief, the ultra rich did not all inherit their fortunes, they don't necessarily spend them on trophy properties, they are pretty philanthropic as a group and not all graduated from Ivy League universities. (For related reading, see: 5 Financial Products/Services the Ultra-Rich Care About.)