This chart, titled “What Assets Make Up Wealth?” from Visual Capitalist, provides a detailed look at the distribution of assets based on different net worth tiers.
The chart is structured to show how the composition of assets varies for people with different levels of net worth, ranging from $10K to $1B.
Here’s a breakdown of the key elements and insights from the chart:
Key Elements
Net Worth Tiers
- The left side of the chart categorizes households into net worth tiers: $10K, $100K, $1M, $10M, $100M, and $1B.
Asset Categories
- The chart divides assets into various categories: Liquid, Primary Residence, Vehicles, Retirement (Pension/IRA), Life Insurance, Other Assets, Mutual Funds, Stocks, Fixed Income Investments, Managed Assets (Trust), Real Estate, and Business Interests.
Percentage of Assets
- The width of each colored section within a net worth tier represents the percentage of total assets in that category.
Insights by Net Worth Tier
$10K Net Worth
- Primary Residence and Vehicles are the most significant assets, making up the largest portions of the total wealth.
- Liquid assets (such as cash) are also notable but not as significant as primary residence and vehicles.
$100K Net Worth
- Primary Residence continues to be a significant asset.
- Vehicles and Retirement accounts also form a substantial portion of the assets.
- Liquid assets and Stocks start to appear more prominently.
$1M Net Worth
- Primary Residence is still important, but Stocks and Mutual Funds become more significant.
- Retirement accounts and Real Estate also hold notable proportions.
- Business Interests start to appear.
$10M Net Worth
- Stocks and Mutual Funds become the dominant asset categories.
- Primary Residence and Real Estate are still significant but less dominant compared to stocks and mutual funds.
- Business Interests grow in importance.
$100M Net Worth
- Stocks, Mutual Funds, and Business Interests take up the largest portions.
- Managed Assets (such as trusts) and Real Estate also hold considerable proportions.
- Fixed Income Investments and Other Assets become more prominent.
$1B Net Worth
- Business Interests become the most significant asset, taking up a large portion of total wealth.
- Stocks and Managed Assets are also crucial.
- Real Estate and Other Assets have notable shares, but other categories like Primary Residence and Vehicles are relatively small.
Summary
The chart effectively illustrates how the composition of wealth changes as net worth increases. For lower net worth tiers, tangible assets like primary residence and vehicles are more significant. As net worth increases, intangible assets like stocks, mutual funds, and business interests become dominant, indicating a shift towards more diversified and potentially higher-yielding investments.
This visualization underscores the differences in asset allocation strategies across different wealth levels and highlights the importance of certain asset types in building and maintaining wealth.
