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Wednesday, June 21, 2006


J. Michael Steele

Should one believe the assertion "28 per cent of millionaires have residences in more than one country"?

Without the operational definition of millionaire as $10^6 in liquid assets, this would certainly be false --- but I have a hard time believing it even with the operational definition.

One's circle of friends is not a good replacement for a random sample, but of the hundred or so millionaires I know, I can't count but three with homes outside the US.

Natually, the situation may be different for persons with primary residence outside of the US. If we were to sample the millionaires of Vancouver or Hong Kong, I would still be surprised if 28 percent had homes in more than one country, but it is not absolutely inconceivable. Still, my guess is that these two cities might be near the global maximum.

Finally, it is hard to imagine how the 28% figure was obtained. National revenue reports (IRS in the US) would be informative but difficult to obtain. The design of an informative survey is flatly an impossibility.

I don't think that it would be easy even to estimate the number of US citizens who own homes in Mexico --- and this is surely an easier task than the "28%" assertion.

Andrew Leigh

Great post. Trackback.


I must admit I am surprised that the report still, after all the inflation we have seen in recent years, considers individuals with more than $1m in liquid assets as high net worth individuals. Perhaps it is the "liquid" part that causes the confusion - does this mean assets held outside of your main home and pensions? In which case this would seem to exclude large numbers of individuals who chose to keep their wealth in property or in tax efficient pension schemes. The danger in this analysis is that many persons might take the same approach as this blog i.e. that any one having liquid assets over $1m is rich enough to attract envy or maybe even additional taxation. Nowadays $1m is not enough in most major cities to buy a decent house in a decent area. I would suggest that a better definition of HNWI would not be an arbitary cash amount but would be those who own their own home and have sufficent capital to live an (international standard) upper middle class lifestyle on the income produced by the capital alone (adjusted for inflation). I would guess today that probably for London and New York that would be around $5m in total assets, maybe even more.

New Economist

J. Michael Steele doubts that 28% of millionaires have residences in more than one country. This is clearly a US perspective. In London it is very common for professional couples to own at least one overseas residence. The weekend papers are full of articles and ads about buying overseas, and there are regular TV programmes on the subject as well, like 'A Place in the Sun'. Quite a few of my friends own properties abroad, and most do not satisfy the Merrill Lynch-Capgemini definition of HNWI.

ChrisA raises a legitimate point about those who hold their wealth in property rather than liquid assets. I know from personal experience that US$ 1 million won't get you far in London or New York property markets. Some private wealth firms have already raised the bar to US$2m or more, and it is inevitable that sooner or later so will Merrill Lynch-Capgemini. The reason this report focuses on liquid assets, though, is that it is aimed at the private wealth management industry. It is not an objective assessment of global wealth, as some newspapers have portrayed it.

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I grew up around a lot of high net worth individuals, and it wasn't exactly uncommon for them to have a winter home elsewhere (we lived in Canada, colddddd winters)

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I grew up around a lot of high net worth individuals, and it wasn't exactly uncommon for them to have a winter home elsewhere (we lived in Canada, colddddd winters


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