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Keeping Up with the Uber-Joneses

May 31st, 2007 at 03:53 am

One of the benchmarks I use to evaluate the progress of my net worth is to compare it to 1% of the amount required for entry to the annual Business Review Weekly "Rich List" of the 200 wealthiest Australians. Last year the cut-off was A$130m. This year it has leap up to A$180m, largely due to the mining boom and surging financial services sector. This represents an increase of 38.5% in just 12 months.

By comparison my net worth increased from A$847K to A$1.033m during 2006 - an increase of "only" 22%. So, it seems that I'm not keeping pace with the Maga-Rich at the moment. This is largely due to the fact that nearly half my net worth is tied up in Sydney real estate, which has been in the doldrums for the past couple of years, and my stock portfolio is a bit underweight the mining sector. But overall I'm still pretty pleased with the performance of my investment portfolio.

Anyhow, although the cut-off point for entry to the Rich List rose by 38%, the estimated total wealth of the people making the list only increased by 27% from A$101.5b in 2006, to A$128.6b today. It appears that while accumulating wealth get easier after you've made your first million, it starts to get harder again after the first billion - those at the top of the Rich List (excluding the miners) are growing their wealth less rapidly than the others in the list.

Enough Wealth

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