Archives for January 29, 2018

Infographic: Asset Type Breakdown by Net Worth

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There are many things that can make up your net worth: cash savings, primary residence, car, IRA, taxable bonds, or private business interest. Visual Capitalist has a infographic called What Assets Make Up Wealth? that shows how this mix changes with net worth. The data is taken from the 2016 Federal Reserve Survey of Consumer Finances.


Some overall observations:

  • As net worth increases, the following components tend to make up a smaller percentage of the pie: liquid cash, primary residence, and vehicles.
  • As net worth increases, the following components tend to make up a larger percentage of the pie: taxable investments (stocks, bonds, mutual funds) and business interests.
  • Most multi-millionaires have business interests as the biggest component of their net worth.

I noticed a few unique quirks in the trends. At the $100k level, primary residence has its biggest share among all of the tiers. Perhaps as you go from the $10k to $100k, you are more likely to own a home and thus it temporarily becomes a bigger component of the picture.

At the $1 million level, pensions/IRAs have their biggest share among all of the tiers. Perhaps above that level, more of your net worth goes into taxable investments. Due to contribution limits, it is hard to hold more than a certain amount in tax-sheltered IRA and pension accounts.

At the $1 billion level, perhaps my eyes are deceiving me, but it appears that the vehicles sliver is nearly twice as wide than for the $10 million level. If a $10 million household has 1% in vehicles, that works out to $100,000. Okay, that’s a Mercedes S-Class or Tesla Model X. If a $1 billion household has 2% in vehicles, that’s $20 million in vehicles! Wow, those $10 million households now seem really tight! It takes a lot more money before they let loose and splurge on some fun toys.