Economic Recovery – It Could Be Remarkable!

Canada’s household wealth grew at an annual rate of 7.8% between 2000 and 2012 according to the 2012 Credit Suisse Global Wealth Report, which also predicted last October that with moderate and stable economic growth, total household wealth will rise over the next five years by 50% around the world.

Moreover, the number of millionaires worldwide is expected to increase by about 18 million people, reaching 46 million in total by 2017. While China will surpass Japan as the second wealthiest country in the world, it is the USA that will remain on top.

The global economic recovery, by this account, will be remarkable. So why is Canada’s  immediate future painted with a “Cloudy Horizon” in the Report’s headline? This is where reading the fine print matters.

Canada’s rise in wealth is actually more modest than the 7.8% figure projects – only 3.7% in the 12 year period, when you take into account currency fluctuations. In addition, wealth per adult in Canada is 13% lower than it is in the US – here at $227,700 US vs. $262,400 in US.

While only 8% of the adult population of the world has assets that exceed $100,000 US, here in Canada our median wealth is $81,610 per adult and this wealth is much more equally distributed than in the US where median wealth is only $38,800.

And, we do have 842,000 millionaires here in Canada. We account for 3% of the top 1% of global wealth holders – quite remarkable for a country that has only 0.5% of the world’s total population.

But, while more than half of our wealth is held in financial assets, which is similar to the US, our rapid growth in mortgages has accounted for a large increase in household debt. It is not yet clear, says the Report, whether our final landing will be hard or soft in this area. Further, in a resource-intensive country like Canada, falling commodity prices are a concern.

What does it all mean? If Canadians can stay employed, manage household debt, and grow our economy, we will be in a great position to weather the uncontrollables, like future currency fluctuations or continued uncertainty in the financial markets.

It’s Your Money. Your Life. As the song goes. . .don’t it always seem to go, that you you don’t know what you got till it’s gone? Hanging on to wealth, by paying attention to debt is important.

Evelyn Jacks is President of Knowledge Bureau and author of 50 books on tax and personal wealth management. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of this year’s three day think tank in Ojai, CA Nov 10-13 will be “Back to the Future – Collaborative Wealth Management.”  Follow Evelyn on Twitter at @EvelynJacks.

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