WASHINGTON (Diya TV) —The number of millionaires in the United States surged by approximately 500,000 last year, setting a new record and outpacing other countries, according to a recent study by Capgemini. The population of high-net-worth individuals in the US grew by 7.3%, reaching over 7.4 million in 2023, up from 6.9 million in 2022.

Capgemini, a French multinational IT firm, defines a millionaire as someone with $1 million in investable assets, excluding their primary residence, collectibles, consumables, and consumer durables. This significant increase marks a bounce-back for the wealthy compared to 2022 when their net worth dropped.

Several factors contributed to the increase in millionaire numbers. Despite higher interest rates, major legislative actions like the Inflation Reduction Act and the CHIPS Act, combined with a stock market recovery in late 2023, played key roles in boosting wealth. The study noted that government spending in sectors such as semiconductors and construction also contributed to the wealth surge.

The ultra-high-net-worth individuals, who make up just 1% of the millionaire population, hold a staggering 34% of the wealth. This concentration of wealth underscores the increasing inequality even among the wealthy.

On a global scale, the number of millionaires grew by 5.1% to 22.8 million, with their combined wealth expanding by 4.7% to $86.8 trillion. Following North America, the Asia-Pacific region saw the second strongest growth in millionaires at 4.8%, followed by Europe at 4%, Latin America at 2.7%, and the Middle East at 2.1%. Africa was the only region where the number of millionaires fell, decreasing by 0.1%.

The US’s addition of 500,000 new millionaires significantly outpaced the rest of the world, driving record fortunes at the top. Their combined fortunes grew to $26.1 trillion, up 7% from 2022. Interest rates remain higher, but the stock market rebound at the end of 2023, along with substantial government spending and stimulus, continues to power the US wealth machine.

The fortunes of those at the very top are growing the fastest. The number of Americans worth $30 million or more increased by 7.5% in 2023, reaching 90,700, with their total wealth surging to $7.4 trillion. Globally, ultra-high-net-worth individuals account for 1% of the millionaire population but hold 34% of its total wealth, highlighting the concentration of wealth even among the affluent.

Elias Ghanem, global head of the Capgemini Research Institute for Financial Services, noted that while the past decade has been exceptional for wealth creation, the future might be more challenging. Factors such as inflation, potential recessions, geopolitical issues, and elections could slow the pace of wealth accumulation.

Investment trends among the wealthy are shifting as well. They are moving their money from safe, wealth-preserving assets to more aggressive growth assets. Their cash holdings have decreased from 34% of their portfolios at the beginning of 2023 to 25% in January. Fixed income holdings have jumped from 15% to 20%, and real estate investments have increased from 15% to 19%. Meanwhile, their stock holdings have fallen to 21%, the lowest level in over 20 years.

Ghanem predicts that private equity and private credit will attract the most significant inflows from wealthy investors this year. Two-thirds of millionaires plan to invest more in private equity in 2024, viewing it as a good long-term play despite its recent underperformance.