Salaried rich versus the Super rich. Those making $1 million or more are the "salaried rich," since they make more of their money from ordinary income.

The Rich, Very Rich, and, Now, the 'Volatile' Rich

By Robert Frank | CNBC – Fri, Jul 13, 2012

The rich tend to be lumped together as one economic group, as if people earning $250,000 a year (or even $1 million a year) are pretty much the same as those making $50 million.

But a new analysis of top incomes tells us that there is a big difference between the super-rich and the merely rich in how they earn money.

The paper, from Roberton Williams of the Tax Policy Center, compares two sets of 2009 IRS data. One group is American tax filers reporting income of $1 million or more. The other is for the 400 top earners in America, who made an average of $271 million each.

[More From CNBC: The World's Most Expensive Car Crash]

Americans with an adjusted gross income of $1 million or more make about a third of that from salaries and wages. Capital gains used to account for more than a third of their income, but since 2000 that share has fallen to 17 percent. Today, the largest share of their take comes from "other income" - mainly earnings from partnerships or S-corps, as well as other capital gains.

The "fortunate 400" - or top 400 earners - make much more of their income from capital gains and other income than from salaries and wages, which account for only 9 percent of their income. Capital gains as a share of their income has also fallen, from 72 percent in 2000 to 46 percent in 2009.

What does this tell us? That those making $1 million or more are the "salaried rich," since they make more of their money from ordinary income. The super-rich make more of their money from one-time capital gains from the sale of stock or a business.

[More From CNBC: The Billionaire Who Stopped Giving]

Since the super-rich are so dependent on capital gains, their incomes have become much more volatile, falling 40 percent between 2007 and 2009. As a group, they also change members rapidly, with 73 percent of them showing up on the list only once between 1992 and 2009.

Income for this super-rich group "has become much more volatile during the Great Recession, "Williams writes. In contrast, income for the merely rich dropped 18 percent.

The higher they fly, the harder they fall.

-By CNBC's Robert Frank

Number of wealthy Malaysians to double by 2015

Number of wealthy Malaysians to double by 2015
Written by Joanne Nayagam
Thursday, 15 September 2011 11:45


KUALA LUMPUR: In its first Asia Wealth Report released this year, private banking group Bank Julius Baer expects the number of high net worth individuals (HNWIs) in Malaysia to grow from 32,000 currently to 68,000 in 2015. Their net worth is expected to increase from US$140 billion (RM433 billion) to US$330 billion.

“We see that Asia is growing in a very dynamic way, accounting for almost 40% of global GDP alone if you basically look at China and India as of today,” said Dr Thomas Meier, Julius Baer CEO for Asia, in an interview with The Edge Financial Daily.

Because wealth is generated in growing economies, said Meier, it is natural for the group to understand how this wealth is translated to different individuals.

The report, prepared in cooperation with CLSA, was based on client surveys and interviews covering topics such as environment, philanthropy, investing, lifestyle and education and shows how Asia’s HNWIs view the world.

The key findings of the report include Julius Baer’s forecast that China and India alone will contribute over 40% of the global GDP growth for 2011 and 2012.

It also estimated a doubling of the number HNWIs across Asia from 1.16 million to 2.82 million as their wealth triples from US$5.06 trillion to US$15.81 trillion by 2015.

China alone is forecast to have 1.4 million HNWIs with a stock of wealth of US$8.76 trillion by 2015.


Growth in Malaysia will be broad-based and job creating.

Indonesia stood out with the highest growth rate in terms of number of HNWIs over the five-year period, rising from 33,000 to 99,000 with a stock of wealth of US$487 billion.

Four key factors will drive the rise in HNWIs in Malaysia.

The first is the country’s strong and stable long-term fundamental GDP growth derived from trade and agriculture, and increasingly the finance and banking sector, said David Lim, Julius Baer CEO for Singapore.

“The wealth report agrees that growth in Malaysia will be broad-based. It will be job creating. There will a lot more engagement of Malaysia with Asean and a reduction in the reliance of Malaysia on the Western markets,” he said.

The second factor is Asia’s strong currencies, which Julius Baer believes will continue to strengthen.

Asian currencies will not only benefit from their countries’ strong reserves but also rising inflow of foreign direct investments.

Furthermore, a stronger currency will also provide more “fire power” for asset acquisition abroad. “There will be that money flow back to Malaysia,” said Lim.

The other two factors are asset price appreciation from real estate and equities.

Equally important for HNWIs is understanding what needs to be done to sustain their lifestyle from a consumption and investment perspective.

One of the key components to determine a financial plan is the cost of goods and because HNWIs do not draw from the same basket of 20 items as many others, the report will help them plan for the long haul. For this, the Swiss private bank launched the Julius Baer Lifestyle Index, which captures the consumption costs in Asia Pacific and the inherent inflation.

The 20 items in the basket used for the index include high-value items from wedding expenses to wine and cars to legal costs, cigars and education.

“It is the cost of living the life of the rich,” said Meier.

The index covers price changes from April 2010 to April 2011, and is an aggregate of price changes sampled from Shanghai, Mumbai, Singapore and Hong Kong.

For the one-year to April 2011, the index was up 11.7% outpacing conventional consumer price index measures, which stood at 5.1% over the same period.

The rising number of HNWIs will also benefit luxury brands expanding in Asia. “Luxury goods and established brands will benefit from this wealth,” said Meier.

The key is brand reputation and management to get a brand into an iconic position said Lim.

Julius Baer was a sponsor in the Forbes CEO Global Conference which was held here over the past few days. The bank is present in Asia with offices in Singapore, Hong Kong and Indonesia.


This article appeared in The Edge Financial Daily, September 15, 2011.

Malaysia’s rich spend mostly on cars, yachts and planes

By Clara Chooi

October 14, 2011

KUALA LUMPUR, Oct 14 — When they have some extra cash to blow, Malaysia’s rich prefer splurging on a fancy new set of wheels, luxurious yachts or private jets, the Asia-Pacific Wealth Report 2011 has revealed.

These big spenders see less glitter or glamour in jewellery or swanky watches, unlike their rich Southeast Asian counterparts in Singapore, who prefer burning bucks on these sparkling adornments.

Last year, 46 per cent of Malaysia’s rich invested their ringgit in luxury collectibles like cars, boats and jets, the highest percentage of any country within the Asia-Pacific region.

In 2010, 46 per cent of Malaysia’s rich invested their ringgit in luxury collectibles like cars, boats and jets, the highest percentage of any country within the Asia-Pacific region. — Reuters file pic

The region’s average topped at just 30 per cent, with Malaysia leading the list and followed by Taiwan at 38 per cent, Indonesia 36 per cent, China 35 per cent, Japan and Australia tied at 30 per cent, South Korea 28 per cent, Hong Kong 23 per cent, India 21 per cent and Singapore, merely six per cent.

Twenty-four per cent of Malaysia’s rich chose jewellery over gleaming sports rims while 16 per cent took a fancy to acquiring rare collectibles like special wines or old coins.

A small 10 per cent thronged art galleries to spruce up their collections while others invested in their favourite sports teams and other miscellaneous “investments of passion”.

The report, released yesterday by Merrill Lynch Global Wealth Management and Capgemini, surmised that such “investments of passion” would continue to hold appeal to all “high net worth individuals” or HNWIs within the Asia-Pacific market as the ranks of the wealthy in the region continue to grow at a brisk pace.

HNWIs are defined as those having investable assets of US$1 million (RM3.13 million) or more, excluding primary residence, collectibles, consumables, and consumer durables.

“Investments of passion hold appeal for all HNWIs, both for their aesthetic appeal and their potential to gain in value. Asia-Pacific HNWIs’ appetite for investments of passion increased in 2010, especially in emerging markets that suffered less than developed economies in the global downturn,” the report said.

The report also said last year’s spending pattern revealed that a majority of HNWIs in Asia-Pacific remained most heavily invested in real estate and equities.

An estimated 30 per cent of the financial assets of Malaysia’s rich is in real estate, followed by 28 per cent in equities, 26 per cent in fixed income, 10 per cent in cash or deposits and six per cent in other alternative investments.

A majority of the HNWIs’ holdings also stayed within their respective home regions, the report added.

“Malaysia, China, and India, the allocations to home-region investments remained high at around 85 per cent,” it said.

When compared to its neighbours in the region, however, the report said Malaysian HNWIs assets were the least diversified with 86 per cent in home-region investments.

The report surmised that the Asia-Pacific HNW segment had “thrived” last year but was expected to face a slump this year and in 2012.

“The number of HNWIs in the region grew to 3.3 million in 2010, from 3.0 million in 2009, making the HNWI population 18.3 per cent larger than in 2007.

“As a result of that growth, the Asia-Pacific HNWI population also became the second-largest in the world, overtaking Europe (which had 3.1 million HNWIs in 2010), and nearing that of North America (3.4 million),” the report said.

Economic expansion in the region was likely to “abate slightly”, however, this year and in 2012, as economies absorb the withdrawal of fiscal and monetary stimulus, rising inflation, constrained capacity, and the macroeconomic imbalances prompted by large foreign-capital inflows.

“As a result, GDP growth in Asia-Pacific excluding Japan is expected to slow to 6.9 per cent in 2011, and 6.8 per cent in 2012 (down from 8.3 per cent last year),” it said.

http://www.themalaysianinsider.com/malaysia/article/malaysias-rich-spend-their-money-mostly-on-cars-yachts-and-planes/

Share of income - For Decades, the Richest Pulled Away

Packers splash out $12 million for pool - tennis court not included

THE super rich don't just have mansions - they have expanding compounds.


James Packer and his wife, Erica, have spent $12 million adding two more houses to their Vaucluse estate.

The Packers' landmark 1972 Guilford Bell-designed house sits on 2374 square metres and cost $18 million last June.

Both the adjoining Vaucluse Road houses are likely to be demolished. This would give the Packers an even bigger lawn with enough room for a relocated pool and underground wing - but possibly not enough for a tennis court.

http://www.watoday.com.au/executive-style/luxury/packers-splash-out-12-million-for-pool--tennis-court-not-included-20100324-qwt5.html