Through a careful study of estate tax filings, the IRS provides annual estimates of wealth holdings of US citizens. The most recent is for 2004. You can find the detailed reports at the web site of the Statistics of Income Division .
For ease of comparison, we aggregated the IRS data into three groups based on their average investable wealth (gross assets minus personal residence):
- Wealthy - $1.5MM
- Rich - $6.5MM
- Super-Rich - $55MM
A second thought derives from the increasing use by the media of the moniker "billionaire." But the IRS data reveal that the super-rich (most of whom are mere multi-millionaires) make up just .2% of our population. They are a true minority in every sense of the term and must be grateful for our Constitutional safeguards against the tyranny of the majority.
The second chart presents the asset allocations strategies of the wealthy.
It is obvious from the data how important to wealth creation are business holdings (the light blue bar). These include closely held stock, limited partnerships, farm assets and the like. The entrepreneurial spirit appears to be alive and well in the 21st century.
Also, real estate holdings make up a significant component of wealth. Individual investors can and should participate in this asset class through ownership of high quality Real Estate Investment Trusts.
Lastly, it is curious how large the bond and cash holdings are for these groups across the board. As indicated elsewhere in this web site , we would suggest for confident investors a 5% commitment to bonds and minimal cash holdings. In contrast the norm appears to be close to 25%.
