Wednesday, September 12, 2018

How much money it takes to be considered rich in South Africa

To be “rich” has a different meaning for everyone – but when thinking of it in monetary terms, South Africans feel like they need to be multi-millionaires in order to consider themselves really wealthy.
To feel financially comfortable in the US requires $1.4 million (R20 million), according to a recent survey of 1,000 people by banking and brokerage firm Charles Schwab.
Moreover, the net amount needed to feel wealthy is an average of $2.4 million (R35 million).
This prompted BusinessTech to conduct a poll of its own, asking the following question: “how much money would be enough for you to feel rich?” – which drew over 10,000 responses.
For the largest chunk of respondents (29%), having more than R50 million in the bank would be the only way to feel rich; however a significant amount of people (a combined 37%) feel that having between R10 million and R20 million would be sufficient.
For some, the definition of being rich in wealth terms means falling within a certain percentage of the population who earn the most – ie the so-called “one percent” – while for others it has more to do with the products you buy, or services you use.
Most wealth research groups use a net worth of US$1 million (R14 million) to define the world’s wealthiest people, otherwise known as high net worth individuals (HNWIs).
It’s also around this level that most of South Africa’s banks (including private banks) open up their doors and services to individuals.
According to the latest AfriAsia Bank South Africa Wealth Report, the country is home to 43,600 HNWIs, each with net assets of US$1 million or more, and 2,200 multimillionaires, each with net assets of US$10 million or more.
The country has as many as 98 centi-millionaires, each with net assets of US$100 million or more.
Data from Credit Suisse shows that the vast majority of adults in South Africa have a net worth below US$10,000 (R120,000). The data shows that the country’s total net worth among all adults was recorded at $761 billion (R9.1 trillion) at the end of 2017.
The top 10% – the richest decile – controls 75% of this wealth, with the top 5% controlling 65.2%, and the top 1% controlling 41.2%.
Put another way, some 3.4 million people control R6.83 trillion of the country’s net wealth. This means that if you have net wealth levels of around R2 million, you’re probably well rooted within the richest 10% of adults in South Africa.
Another metric for “rich” would be to see what income bracket you would fall into when it comes to paying taxes. The highest wealth tax bracket in South Africa is 45% of taxable income for earners above R1.5 million annually.
The same banks that offer private banking services with a net worth of around R13-R14 million also offer the same services to clients with an average income of around R1.1 million a year.

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