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Half of all adults in the world have less than $2,300 in wealth (2016)
- TAForObvReasons 8y agohttps://www.gobankingrates.com/banking/savings-account/62-percent-americans-under-1000-savings-survey-finds/ https://www.gobankingrates.com/banking/savings-account/62-pe... > The overall results from the survey show that 62 percent of Americans have less than $1,000 in their savings accounts, and a third of those under-savers have no savings account at all. The portion of savers with balances over $1,000 is 29.1 percent.
- nkozyra 8y agoWhat's the value of a "savings account" in 2018, though? Not to be flippant, but it's a bit anachronistic to even care about something that provides so little ROI, and if people are deriving greater meaning from that I'd hope the analysis is more nuanced.
- caymanjim 8y agoThere's not much point in investing less than $1000. People are getting hung up on the "savings" part of this. It could be a checking account, it could be cash in a jar. The point is that it's the amount of money available that isn't tied up in material assets like real estate, a car, etc. or isn't invested in something like a 401(k).
- frockington 8y agoThan I have ~$500 most of the time. Why would anyone willing lose money every year by hoarding it in a savings account/in a jar
- vonmoltke 8y ago> People are getting hung up on the "savings" part of this. It could be a checking account, it could be cash in a jar. People are "hung up" on it because, per the linked article, the survey literally asked about savings accounts. I have more money sitting in cash at home than I do in my savings accounts. The only reason my wife and I have savings accounts is Bank of America's Keep the Change thing.
- danesparza 8y ago> What's the value of a "savings account" in 2018, though? Low risk emergency fund or sunk cost funds. If you purchase everything on credit or debt, you're asking for trouble in the long run. Debt or credit involves substantially more risk.
- vonmoltke 8y agoIf you purchase everything from a savings account you are going to get eaten alive in withdrawal fees. Note the survey question literally asked about "savings accounts". I would answer that question with a number below $1,000, but I still have a significant reserve and no credit card balances.
- djrogers 8y agoI haven't paid a withdrawl fee on a savings account in decades, and I use them for all my sinking funds.
- mattkrause 8y agoRegulation D limits savings accounts to six withdrawals a month, after which almost every bank charges you an “excess activity” fee.
- djrogers 8y agoSinking funds aren't generally used for large numbers of purchases - but if they happen to be one month, you can just make a single transfer to a checking account.
- vonmoltke 8y agoI don't see the point of a savings account in this situation. Why are all your funds not just in the checking account?
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- jandrewrogers 8y agoThis is because savings accounts are an anachronism from another era and serve no modern purpose. It is misleading to conflate savings accounts with savings; no one I know puts their savings in a savings account and many people with plenty of savings don't have one at all. It would be surprising if most Americans had and used a savings account in 2018. In the US, the median disposable income -- money you can either save or spend on luxuries after all typical living expenses -- is about $1000 per month. Savings are not an issue for the majority of Americans. Unless you define it as having a savings account with money in it.
- pjc50 8y agoDo they perhaps mean "free cash float", that is (regardless of what the account is called) money that is immediately available to spend without causing a cashflow disaster later in the month?
- gk1 8y agoWhat do you do with your cash if not put it into a savings account?
- aantix 8y agoChecking account? Not sure why banks make any sort of distinction anymore.
- gk1 8y agoI don't understand. Checking accounts have much lower interest rates than savings (or money market) accounts, so why keep cash in a checking account?
- WillPostForFood 8y agoGiven the extremely low interest rates savings accounts have been delivering, short term cash can go to wallet, or checking, and any cash you don’t need short term should go someplace that will earn more than a savings account, like a mutual fund or at least a CD.
- fortythirteen 8y agoWould you rather have <$1k in savings in America or have a decent savings in a 3rd world country? Equating income to quality of life is 1st world centric.
- frockington 8y agoThat's probably because nobody uses savings accounts for large amounts of wealth. I have $0 in a savings account because a 3 month T note yields significantly more than the 1.4% Ally saving account that everyone seems to love
- josephjrobison 8y agoAre all the offshore banking deposits counted in the Swiss wealth? If so that’s a huge difference maker.
- Retric 8y agoThe Swiss did not join the EU while it maintains very close relations, which likely has very large impact due to current exchange rates. On 6 September 2011, the Swiss franc effectively became fixed against the euro: the Franc had always floated independently until its currency appreciation became unacceptable during the eurozone debt crisis. The Swiss National Bank set an CHF/EUR peg that involved a minimum exchange rate of 1.20 francs to the euro, with no upper bound in place. The Bank committed to maintaining this exchange rate to ensure stability. The peg was abandoned on 15 January 2015, when renewed upward pressure on the Swiss franc exceeded the Bank's level of tolerance. https://en.wikipedia.org/wiki/Switzerland%E2%80%93European_Union_relations https://en.wikipedia.org/wiki/Switzerland%E2%80%93European_U...
- ghostbrainalpha 8y agoHow is that a difference maker? Are you saying that there is a large group of people who have less than $2,000 of 'wealth', but also have Swiss Bank accounts?
- llao 8y agoI only read the headline but does this use local purchasing power in $ equivalents? If not, I don't see what use that number could be.
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- kartan 8y ago> If not, I don't see what use that number could be. There is still value in the comparison. Products like mobile phones are going to have similar prices around the globe. Also, it affects the capability to travel. With my European salary, I can travel anywhere in the world. Norway is more expensive than Turkey, but I can travel to both. We had a team member for a secondment that came from a country with lower salaries. Our company had a policy where you pay first and then you get refunded. He needed to get all expenses pre-paid because of his full salary not being enough to pay for the expenses. If you can buy a house in your country for 2,000 dollars. I can also buy a house in your country at that price. Probably I can buy a few of them once I have my basic needs covered in my own country. So, there are more interesting data points than purchasing power in dollars. But it is relevant when we talk about wealth distribution.
- toomuchtodo 8y agoWhat is a secondment?
- grzm 8y ago> "Secondment is the assignment of a member of one organisation to another organisation for a temporary period. The employee typically retains their salary and other employment rights from their primary organisation but they work closely within the other organisation to provide training and the sharing of experience." https://en.wikipedia.org/wiki/Secondment https://en.wikipedia.org/wiki/Secondment The more common usage I've heard of this word is that someone has been seconded to another group.
- kevinmannix 8y agoThis is from 2016. Can we update the title?
- OldSchoolJohnny 8y agoYeah the pace of change lately has me mentally filtering out and avoiding any articles / posts / news / documentaries older than about 6 months at this point.
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- lonewolf22 8y agoMore of us who know a thing or two about financial systems should get in the wealth redistribution business.
- Carlton87 8y agoThe only way you will ever achieve wealth redistribution is with violence. Look at the great leap forward. It will not happen in America, at least I pray not in my lifetime.
- lovich 8y agoIt's happening in America right now, just not in the way you think. Everytime a company pays their employees so little they need welfare to live, that's redistributing wealth from society to shareholders It's also been happening for years with social security redistributing wealth from younger workers to older retirees
- frockington 8y agoYou should get out and meet real people in America. It will probably change the first half of your post
- lovich 8y agoNot quite sure how. I ended up working at Walmart after college and had to steal food since I couldn't afford rent,student loans, and medicine. Pretty much everyone of my coworkers was in the same boat with student loans being the only difference. If you think it's not happening I suggest you put all your assets in an account you won't access and then try and live for a few years off a retail job
- Carlton87 8y agoLife Pro Tip: Have better skills and be a better employee.
- danesparza 8y agoI'd like to point out this article consistently uses the word 'wealth'. I take this to mean all assets owned, including cash assets. Let that sink in a while. That would include vehicles, houses, clothes, everything. I am musing on this problem from my air conditioned office at work. We truly have first world problems.
- Matt3o12_ 8y agoBut does this also include negative wealth? Especially in the US, it seems to me that many people have a lot of debt – staring from credit card debt to a too expensive car lease (and a new one ever 3 years) to the house they have payments on for ~50 years? This way, it seems to me that a lot of people (especially younger ones) have a wealth of ~-10,000€.
- toomuchtodo 8y agoDebt is “bad” when used for depreciating assets (cars, credit cards). Debt is “good” when used as leverage on appreciating assets (real estate) or working assets (tools, business vehicles, servers, or anything else being used to generate cash flow). If I have an interest only loan on something like a taxi medallions (thanks Planet Money for the example!), I generate cash flow with that asset, and can walk away from the debt at any time through bankruptcy of the owning entity, that’s still positive wealth (cash flow). The less capital you need to obtain access to greater amounts of cash flow, the better the cash on cash return/investment quality.
- Matt3o12_ 8y agoBut real estate debt is only good if you can afford it and you buy smart. I know a lot of people who bought a house and sold it later for less even after all the payments because they bought it high and sold it low. Furthermore, if you pay for something very long, you are also going to be paying a lot of interest. You wouldn’t be paying that long if you could afford it and you would be getting a better credit rate if you could afford it. Unfortunately not everybody is able to invest smartly and thus good debt easily becomes bad debt. It doesn’t help that most people potray reale estates as good debt because they really aren’t that good unless you know what you are doing.
- RoutinePlayer 8y agoBut isn't the implication that half of all adults in the world have MORE than $2300 actually more incredibly awesome?
- chc 8y agoIt really isn't all that awesome, because that isn't very much net worth at all. At a minimum, you'd want everyone's net worth to be at least the average value of a car, I'd think.
- citrablue 8y agoI wonder how this compares historically, adjusted for era. Any idea?
- ChrisLomont 8y agoYoung people tend to have less assets than old people. Graduate from college with the median debt (~30K) and now you have net negative worth for a while. But this does not mean you're poor, and it certainly correlates with much higher net worth when older. Buy a car, which now has immediately lost value (in general), and you may have negative net worth for some time. But this is not bad, nor is it long term poor. As such, I don't think wanting everyone's net worth to be the average value of a car is realistic. Maybe averaged over a lifetime, or some such non-time-static metric would be better.
- Consultant32452 8y ago>It really isn't all that awesome 70% of the world's population lives on less than $10/day. And that is a significant improvement over most of history. If it's really half of the world that has $2300 that sounds very promising to me. I guess "awesome vs not awesome" really amounts to "compared to what?" Compared to the fantasy in my head of how life could be, it's terrible. Compared to real world history, it sounds pretty good.
- opportune 8y agoyeah it’s really something that half of all adults have more wealth than the cost of a shitty beater car
- retrac98 8y agoThere's a huge difference between being first world poor, and third world poor. Just my experience, but my first world poor friends, without exception are all bad with money. They have little understanding of how money actually works, have terrible spending habits, are incredibly risk averse, and carry a "money is evil" mindset. If it's possible for you to live within your means (edit: putting aside illness, addictions, felonies etc), you can build wealth at a good rate in the first world. You may never be a multi-millionaire, but you can be financially secure and stable.
- macintux 8y ago> If it's possible for you to live within your means, you can build wealth at a good rate in the first world. There are a significant number of exceptions to this idea. If you dig a deep enough hole (drug problems, felonies, etc) it's hard to just keep a roof over your head. And sure, "it's their fault", but for a lot of people the die was cast when they were very young. (Update: I should clarify that this may be a U.S. problem vs a first world problem. The safety net here is abysmal, speaking as someone who has spent way too much time and money helping a friend manage.)
- soulnothing 8y ago[removed]
- distances 8y agoAre you sure you mean upper six figures, and not five? With high six figures your one month's salary would dwarf your savings, which sounds quite implausible.
- hermitdev 8y agoI think the GP probably meant upper end of the [100k, 200k) range. If they truly meant upper end of the [100k, 1M) range and they're still in the same state of having a mere combined 11k saved...they're doing something horribly wrong with their finances and should take a step back and reevaluate their personal finances. I'm in the [100k, 200k) range, and I've had to reevaluate my finances. I used to live pretty comfortably on less than half my income. I had no credit card debt, my $50k car was paid off. Student loans were paid off a decade ago. Then, I got married and now have 2 step children. Between moving into a larger place to accommodate the new family and all the costs associated with getting married, moving & furnishing a larger place, I'm just now about to start to get our heads above water. I had to take money out of savings before we could get outflow to be less than inflow.
- dalbasal 8y agoWealth, is wider and more complicated but if we narrow things to "money," there's an accounting tautology to take note of. You borrow a dollar from the bank. You buy something from me for a dollar. I put it in the bank. I have a dollar in the bank. You have -1 dollars, a debt to the bank. $0 net dollars between us. $0 average money-wealth. This is what most money is, debt. The average amount of debt-created money. If you keep borrowing from the bank, buying from me, and I keep putting money in the bank... both sides of our combined balance sheet will keep growing. For every dollar in my account, you will owe another dollar. The average & sum will always be 0. So.. if we are looking at just the money part of wealth, it never grows in total. If you borrowed to spend on consumption, then the story ends here. If you borrowed to buy non-money assets, then you still have those durables. For example, say you borrowed $1 to buy a house. I built it for you. I have a $1. You have -$1 and a $1 house. In reality, it's hard to differentiate between real assets and money assets. What is a security, really? This part gets hard so I'll leave it at that. The upshot is that a lot of our collective wealth adds up to $0. For every dollar someone somewhere has in the bank, someone else owes a dollar. In the currently prevailing banking/money/governance system, a lot of the debt is owed by governments so they take a big chunk of the negative side. This leaves more room for people to own rather than owe money. If you subtract each persons share of national debt from your median person, I would expect the number is negative.
- jonknee 8y ago> If you subtract each persons share of national debt from your median person, I would expect the number is negative. But that would make no sense because that debt is also owned by other people, including a lot of citizens.
- dalbasal 8y agoMedian is generally below average.
- tedsanders 8y agoMoney is a small fraction of wealth. US household wealth is like $100B. US L2 money supply is $14B. https://en.wikipedia.org/wiki/Wealth_in_the_United_States https://en.wikipedia.org/wiki/Wealth_in_the_United_States https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2
- anoncoward111 8y agoI did a lot of manual excel work in sorting and filtering the Credit Suisse Global Wealth Report after I received it. An important thing to know here is that this is net wealth, not gross wealth. IF you have a $500,000 house and a $400,000 mortgage and nothing in the bank and no student loans and so on, you have $100,000 in net assets. This is why 33% of Americans and 90% of Russians have less than $10,000 in assets. Massively, massively in debt, or massively, massively income deficient relative to someone from New Zealand or Switzerland.
- ShabbosGoy 8y agoWhat I’ve learned from many people is that land is a valuable asset to have. Land is naturally scarce with a fixed supply, so it is a decent vehicle for storing wealth. Would be cool if you could transfer land titles via blockchain, then you don’t need a middleman. If you can provide tiny lots to purchase for people who don’t traditionally invest in land, it could potentially be a great way to help those who are in poverty build a bit of wealth.
- tunesmith 8y agoThis article is confusing to me because it conflates two things I tend to keep separate in my head - the changing income inequality within one country, and the income inequality of the entire world, mixed together. Within a nation you can measure and track inequality with something like the GINI coefficient, and for nations like the US, inequality has worsened over time. Within the world, we've seen massive improvements over time (at least that was my impression reading Hans Rosling) and it seems rather inexorable that globalization will make it improve even more over time. I'm guessing the problem there is like how "privilege can make greater equality feel like oppression" - if the levels continue to normalize over time, then the richer countries will get (relatively) poorer. But if the richer countries have higher inequality, then that burden will be mostly felt by the richer countries' poor.
- ireadfaces 8y agoDid it factor currency value too? An average Indian has a salary of 400$ or lesser, with which he pulls off a family of 4.
- shalmanese 8y agoForget the 3rd world, half of all US renters have less than $5200 in wealth: https://www.federalreserve.gov/publications/files/scf17.pdf https://www.federalreserve.gov/publications/files/scf17.pdf (page 13)