How much money does a high net worth individual or an ultra high net worth individual in Canada have? We all like to compare ourselves to others even though we don’t want to outwardly admit it. Net worth shouldn’t equate to self worth, but you might wonder if you would fall into this (what many would consider) ‘elite’ category as you saw your investment accounts increase dramatically in 2021.
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Ultra High Net Worth vs High Net Worth in Canada
However, rich doesn’t mean wealth according to the book Psychology of Money by Morgan Housel.
You can appear rich in Canada and carry a $2500 Louis Vuitton purse but your bank balance may show -$25,000.
People may look at your designer clothing and designer hand bags and expensive car and they may assume you are wealthy (and you very well may be) but they really don’t know how much is in your investment account.
Also, net worth doesn’t equate to HNW.
Cashflow is more important than net worth.
Net Worth Does not Equal HNW
Net worth typically means assets minus liabilities and generally it includes your primary residence or other real estate.
A Wealth of Common Sense blogger, Ben Carlson shares the net worth of Americans. These would include assets such as real estate and primary residences. Also, these numbers are difficult to compare to because there are people who live in HCOL cities and have higher salaries but also higher expenses. Nonetheless, this chart provides a rough estimate of the net worth of Americans by the top percentiles by age.
Related: How much should I Have saved by 40?
When you look at terms such as high net worth individuals or ultra high net worth individuals, it means something different.
HNW, VHNW, or UHNW do not account for your primary residence and real estate, and measures mainly financial liquid assets like cash, stocks, bonds, mutual funds, GIC’s, ETFs etc.
Liquid assets. Assets that can be disposed of within days.
This is why I think liquid net worth is the ultimate measure of net worth and why I think liquid net worth trumps net worth. You can be house rich and cash poor (like many Vancouverites are- their house is worth $2 million dollars but they may struggle to pay for their $8,000 property tax bill).
Yet they might still be part of the top 1% of net worth in Canada.
What does High Net Worth in Canada Mean?
High net worth Canada harder to achieve than you think because it looks at investable assets.
A HNWI (High Net Worth Individual) means technically having more than USD $1,000,000 in investable assets. When you talk about investable assets, these are liquid assets. As mentioned earlier, these are cash, bonds, stocks.
Your Canadian primary residence doesn’t count. Your car doesn’t count. Your Rolex or other jewelry doesn’t count.
A little under 1% of Canadians fall into this HNW meaning.
These HNWIs with $1,000,000 to $5,000,000 USD in financial assets are called millionaires next door, according to Investopedia.
What is a high net worth investor in Canada? Similarly, they are people who have over 7 figures in liquid assets, there are only about 400,000 Canadians who fall under this category, whereas in the United States, there are over 6.5 millionaires who are HNW.
What is a Very High Net Worth Individual
Then there’s the middle term for someone who falls between high net worth and ultra high net worth. It’s called VHNW.
For lack of a better descriptor, a VHNW individual has between USD $5 million to $30 million in liquid assets.
VHNWI are also called mid-tier millionaires, many of them are decamillionaires. There are 1.89 million mid-tier millionaires globally, according to Investopedia.
There are under 2 million decamillionaires in the world.
Very-HNW would qualify for free private banking in Canada and lots of private wealth managers or bankers trying to sell you whole life insurance and pawn it off as a tax saving strategy.
What does Ultra High Net Worth in Canada mean?
What is considered ultra high net worth Canada? Ultra high net worth Canadians have over USD $30 million in investable assets. There are about 11,000 Canadians who are ultrahigh net worth individuals.
Not surprisingly, usually the older you are the more financial assets you accumulate.
According to Wealthprofessional.ca, the average age of UHNW individuals is 64.
Around the world, there are only over 200,000 UHNW individuals (Source: Investopedia).
Wealth-X has an ultra high net worth global report on the world’s wealthiest. In 2020, UHNW individuals in the United States actually increased by 8%. In Canada, the year-over-year number of UHNW individuals actually shrunk by 2.4%.
What do Warren Buffett, Lebron James, and Will Ferrell have in common other than being ultra rich? They share frugal habits of the super rich.
Perks of Being a HNW Investor in Canada
When you are a HNW investor in Canada or you have more than 7 figures in liquid assets, bankers and advisors will want to get to know you.
Financial Advisors Vying for your Attention. You merely glance at the private wealth managers and you can see the dollar signs in their eyes. If they can sell you their funds or charge you their (at minimum) 1% management fee they will be golden.
1% management fee on $1,000,000 is $10,000. Of course advisors wouldn’t get the full 1% but gather a few HNW investors and HNW clients here and there, and boom, that’s a lot of money for taking clients out for coffee and socializing. 😉
Private Banking. In addition, as a high net worth investor in Canada, you’ll qualify for Canadian private banking status. You’ll be able to have a private banker and skip the line up at the bank teller, you’ll get faster service on the phone when you call in, and when you go to the bank and withdraw money and they see your bank balance, they will treat you like gold even though you have a hole in your 12 year old winter jacket.
Also, with private banking, you’ll get preferential exchange rates, preferred rates for loans, free succession and trust and estate planning, and access to important events where you can hob nob with other HNW Canadians. You’ll still have to pay the private banking fees, but once you hit a minimum of $3-$5 million in investable assets, these fees will be waived.
For a discount brokerage like Questrade, once you have over $250,000 invested you have access to Questrade Platinum. In theory you should have less wait time when you contact them via Questrade Chat and faster access via email.
Accredited investor. Finally, if you (and your spouse) are a HNW investor in Canada with over $1,000,000 in investable financial assets, you could be considered an accredited investor. Either that, or you have over $5 million in net worth total (including real estate like a primary residence), or you have over $200,000 in annual income in the past two years (or combined with your spouse you have over $300,000 in annual income). When you are an accredited investor, you will have access to invest your money in things like hedge funds, venture capital, and angel investments.
Tracking your Net Worth to HNW Status
If you have already reached HNW or UHNW status, congratulations. You may already have a financial advisor working with you to take you out for coffee (on your dime but you just don’t know it) 😉
If not, and you want to take matters into your own hands and keep track of your liquid financial assets until you hit the HNW investor number, I recommend a free net worth and investment portfolio tracking tool called Wealthica.
It tracks your investment portfolio and cash holdings over a number of investments, even if you have two different brokerage accounts or multiple no fee bank accounts.
You can also add non-liquid assets such as real estate but you will have to update these numbers manually.
Here’s my review of Wealthica.
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Do you know any HNWI or ultra high net worth Canadians? What are their lifestyles like?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.
4 thoughts on “Ultra High Net Worth vs High Net Worth in Canada”
In this money community, I know a lot. In real life, maybe only 2-3 people at best.
@Sherry- Thanks Sherry for visiting!
So many of the investors we know are into real estate. It’s interesting that it’s not included as so many people have made their fortunes in real estate. I guess they could eventually cash out in order to be more liquid.
I can say that we are not part of this exclusive club and don’t know if we ever will be. And that’s totally okay with me.
@Maria- Good point Maria…Yes, I think the majority of people/ investors I know have their assets mainly in Canadian real estate.