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Who are Australia's High Net Wealth Individuals? You Might be Surprised

Published 31 August 2022

Who are Australia's High Net Wealth Individuals? You Might be Surprised

Many of our clients are surprised to discover they are considered to be HNW individuals - or are close to becoming so. Find out what you need to think about if this is you.

Definitions of High Net Wealth vary across the globe and take in a multitude of factors. The Australian Taxation Office (ATO) deems wealthy Individuals within Australia as those with net investable assets (NIA) of over $1 million (or net assets that exceed $2.5 million including the family home) and also bank an earning of more than $250,000 per year.

For you to measure your investable wealth, the following calculation needs to be applied: add the total of all of your financial assets and subtract all of your consumer debt, factoring in credit card debt and loans.

For people with more than $1 million in investable wealth, the protection, growth and passing on of that wealth requires a strategic and measured approach. Here are some top level things you need to be thinking about.

Financial planning

Financial planning is the process which helps you to set both mid and long-term financial goals. It’s a clear roadmap for your financial future which will help guard and bolster your wealth.

People often believe financial planning is geared towards setting themselves up for retirement, but it can be much more. Financial Planners also help you with establishing major short and mid-term financial goals along the way which may include investments in shares, real estate, cash, term deposits and superannuation.

Know your threshold for risk

Before you explore the appropriate blend of investments to match your financial goals, it’s important to establish your appetite for risk.

An experienced financial adviser will help you to determine the right balance of risk and return and will also be able to explain other external factors which may affect your portfolio, including inflation and interest rate changes.

Diversified portfolio

As mentioned above, there is risk associated with any kind of investing so it’s important to maintain a diversified portfolio.

Diversified portfolios help flatten market fluctuations as there is less riding on individual stocks in specific industries - so where one may go down, another may be going up.

Review and adjust

Your financial plan is not set-and-forget. Your financial planner will regularly review your assets, investments and your goals to make sure your wealth is doing what you need it to do.

Make sure you flag any changes in your financial circumstances with your planner. With an ever-changing financial climate, regular reviews are critical to minimise risk and optimise your portfolio’s performance.

With significant rises in the property market over the last 2 to 3 years, and a national trend of an increase in household savings, the number of people who fall into the HNW bracket has increased. Many more are finding themselves on the threshold of this bracket, and who could, with the right advice, grow their wealth and create financial stability.