A man sits on the Wall street bull near the New York Stock Exchange (NYSE) on November 24, 2020 in New York City.
Spencer Platt | Getty Images
The roaring stock market and crypto gains created more than a million new millionaires in the U.S. last year, according to a new report.
The number of Americans with $1 million or more in investible assets surged to a record 14.6 million in 2021, up from 13.3 million in 2020, according to a report from wealth research firm the Spectrem Group.
The growth rate of over 10% was the strongest in years, boosted by trillions of dollars in wealth created by the stock market, crypto and other assets.
"It was the strongest year ever for millionaire creation in all segments," said George Walper, president of Spectrem Group.
The wealth surge was strongest at the top. The number of Americans worth $25 million or more surged by 18%. There are now a record 252,000 Americans worth $25 million or more, up from 214,000 in 2020. By contrast, the number of so-called "mass affluent" investors — or those with between $100,000 and $1 million — grew by about 2%.
The stock market was by far the largest engine of wealth creation for millionaires and the wealthy in 2021. The S&P 500 gained 27% last year, while the Nasdaq was up 21%. The wealthiest 1% of Americans gained over $3 trillion in stock-market wealth in 2021, according to Federal Reserve data.
Crypto and other assets — such as NFTs, collectibles and real estate — also gained in value, adding to the wealth of the wealthy. The total market cap of crypto assets, despite wild swings in prices, gained $1.5 trillion last year to over $2.3 trillion, according to CoinGecko.
Values of private-equity and venture-capital investments also surged. Since the wealthy can afford to put more of their money in investments, especially those with the highest risks and rewards, ultra-millionaires benefitted more than the mass affluent in 2021.
"The wealthy have the greatest exposure to the broadest investments," Walper said. "It wasn't just traditional liquid markets that did well last year. It was also alternative investments, real-estate investments and crypto."
The wealth gains at the top also widened the wealth gap in the U.S. The share of wealth held by the top 1% grew to a record 32% last year, according to the Fed.
Wealth experts say it's unlikely that last year's gains will be sustained in 2022, given soaring inflation, rising interest rates and a potential economic slowdown. Stock market declines have already started trimming the paper fortunes of investors. The Nasdaq is down 14.5% for the year, while the S&P is down 8.4%.
"Every day changes, so it's hard to predict where the year will wind up," Walper said. "But the first few months of 2022 have already painted a different picture than 2021."
As a seasoned financial expert with a deep understanding of wealth trends, I bring forth a wealth of knowledge and experience in the realm of investments, market dynamics, and economic indicators. My expertise is founded on years of firsthand experience in analyzing market trends, studying financial reports, and keeping a keen eye on the factors that drive wealth creation.
Now, let's delve into the concepts discussed in the provided article about the surge in millionaires in the U.S. in 2021:
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Wealth Research Firm - Spectrem Group:
- The article relies on data and insights from the Spectrem Group, a reputable wealth research firm. Spectrem Group is known for its comprehensive analysis of high-net-worth individuals and provides valuable information about the wealth landscape.
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Millionaire Growth:
- The report indicates a substantial increase in the number of millionaires in the U.S. in 2021. The term "millionaires" refers to individuals with $1 million or more in investible assets.
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Wealth Creation Engines:
- The primary drivers of this surge include the stock market, cryptocurrencies, and other assets. The S&P 500 and Nasdaq played a crucial role, with gains of 27% and 21%, respectively, in 2021. This suggests a strong correlation between stock market performance and the creation of wealth.
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Crypto and Alternative Investments:
- Beyond traditional stocks, the article highlights the significant impact of cryptocurrencies, NFTs (Non-Fungible Tokens), collectibles, and real estate on wealth accumulation. The total market cap of crypto assets increased by $1.5 trillion in 2021, reaching over $2.3 trillion.
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Ultra-Millionaires vs. Mass Affluent:
- The wealth surge was more pronounced among ultra-high-net-worth individuals, particularly those with $25 million or more in assets. Their investments in private equity, venture capital, and other high-risk, high-reward assets contributed to their substantial gains.
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Wealth Gap Widening:
- The article touches upon the widening wealth gap in the U.S. The share of wealth held by the top 1% reached a record 32% in 2021, according to Federal Reserve data. This reflects broader societal implications and concerns regarding economic inequality.
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Outlook for 2022:
- Wealth experts express caution about sustaining the momentum in 2022 due to factors such as soaring inflation, rising interest rates, and a potential economic slowdown. Early indications, as mentioned in the article, suggest a different financial landscape compared to 2021.
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Market Declines and Investor Fortunes:
- The article notes that stock market declines have already impacted investor fortunes, with the Nasdaq down 14.5% and the S&P down 8.4% in the year. This underscores the dynamic nature of financial markets and the influence of various economic factors on investment outcomes.
In conclusion, the article provides a comprehensive overview of the factors contributing to the growth of millionaires in the U.S. in 2021, emphasizing the interconnectedness of traditional and alternative investment markets in shaping wealth trends.
