World’s wealthy state investment expectations

The world’s wealthy believe they can more than triple their wealth within 10 years, requiring compound annual returns just over 12%, according to research.

The 1,751 high net worth people interviewed globally late last year for the survey expected to grow their assets from an average $2m now to $6.4m by 2020.

This will require formidable returns, but is less ambitious than the quadrupling most expected when they were polled by Scorpio Partnership last year.

Respondents expect twice the returns in the coming year they made over the last one, said Scorpio, and co-authors Standard Chartered Private Bank and SEI.

Those in Asia and Europe are more confident about their wealth this year, while North Americans have revised short term expectations down after poor performance in 2010.

The report noted wealthier people are generally more energetic – 80% more so, according to its analysis.

Scorpio’s report also created a formula for financial success. “High energy levels are needed to overcome the limiting effect of time, and that energy needs to be channeled into innovation and taking responsibility for others.”

This created the formula: (Innovation plus accountability) divided by time to the power of -1, all multiplied by energy squared.

Just over half the world’s rich also regard philanthropy and charity as one measure of their success, and 42% give over $2,000 a year.

Asians focus on governance when assessing good causes, while North Americans look at administrative costs and charities being able to measure their impact.

All regions cited ‘focusing on the greatest need’ as most important when deciding where to give, with a generally declining importance through measurement of results, administration costs, governance, opportunity to get involved and peer recommendation.

David Walker

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