
Half of all adults in the world have less than $2,300 in wealth (2016) - deegles
https://qz.com/848181/half-of-all-adults-in-the-world-have-less-than-2300-in-wealth-credit-suisse-global-wealth-report-indicates/
======
retrac98
There's a huge difference between being first world poor, and third world
poor.

Just my experience, but my first world poor friends, without exception are all
bad with money. They have little understanding of how money actually works,
have terrible spending habits, are incredibly risk averse, and carry a "money
is evil" mindset.

If it's possible for you to live within your means (edit: putting aside
illness, addictions, felonies etc), you can build wealth at a good rate in the
first world. You may never be a multi-millionaire, but you can be financially
secure and stable.

~~~
BadassFractal
Any advice on how to learn to not be "bad with money"?

~~~
the_gastropod
A book that changed my life, Your Money or Your Life, by Vicky Robin and Joe
Dominguez, was recently re-published with some updated info. If you're the
reading type, you should pick up a copy at your library. It guides you through
making peace with your past, figuring out your _real_ income and spending,
tracking your savings/spending every month, thinking about expenses in terms
of hours of your life, etc.

If you get an older copy, just don't take the investment advise too
seriously—it's pretty out-of-date. Everything else is gold.

~~~
mi100hael
Another good, well-known book on the subject is the Millionaire Next Door:
[https://en.wikipedia.org/wiki/The_Millionaire_Next_Door](https://en.wikipedia.org/wiki/The_Millionaire_Next_Door)

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danesparza
I'd like to point out this article consistently uses the word 'wealth'. I take
this to mean all assets owned, including cash assets.

Let that sink in a while.

That would include vehicles, houses, clothes, everything.

I am musing on this problem from my air conditioned office at work. We truly
have first world problems.

~~~
Matt3o12_
But does this also include negative wealth? Especially in the US, it seems to
me that many people have a lot of debt – staring from credit card debt to a
too expensive car lease (and a new one ever 3 years) to the house they have
payments on for ~50 years? This way, it seems to me that a lot of people
(especially younger ones) have a wealth of ~-10,000€.

~~~
toomuchtodo
Debt is “bad” when used for depreciating assets (cars, credit cards). Debt is
“good” when used as leverage on appreciating assets (real estate) or working
assets (tools, business vehicles, servers, or anything else being used to
generate cash flow).

If I have an interest only loan on something like a taxi medallions (thanks
Planet Money for the example!), I generate cash flow with that asset, and can
walk away from the debt at any time through bankruptcy of the owning entity,
that’s still positive wealth (cash flow).

The less capital you need to obtain access to greater amounts of cash flow,
the better the cash on cash return/investment quality.

~~~
Matt3o12_
But real estate debt is only good if you can afford it and you buy smart. I
know a lot of people who bought a house and sold it later for less even after
all the payments because they bought it high and sold it low.

Furthermore, if you pay for something very long, you are also going to be
paying a lot of interest. You wouldn’t be paying that long if you could afford
it and you would be getting a better credit rate if you could afford it.

Unfortunately not everybody is able to invest smartly and thus good debt
easily becomes bad debt. It doesn’t help that most people potray reale estates
as good debt because they really aren’t that good unless you know what you are
doing.

~~~
shaggerty
Even if your house ends up being less than you bought it for you still have a
house. Assuming you want to live in the same area long term it seems wiser to
finish a mortgage and be left with a house that's worth less than you paid for
it versus paying rent for the same amount of time and ending up with nothing.

~~~
astura
I think you're ignoring the significant carrying costs of a house. My house
last year had over $11,000 in carrying costs in just taxes, insurance,and
interest. Never minding the upkeep and repairs (which are significant yet
difficult to estimate). There's other hidden costs like opportunity cost, the
return on investment you'd be getting if you didn't have that money tied up in
your house.

~~~
toomuchtodo
Houses have almost always kept ahead of inflation, and carrying expenses
replace rent.

~~~
astura
Read the post I'm replying to, we're talking about a house that went DOWN in
value.

~~~
toomuchtodo
I did. It’s extremely rare for real estate to decline in value, and walking
away from the property is always an option if it has (or a short sale, which
is must less detrimental on your credit).

~~~
TheCoelacanth
> It’s extremely rare for real estate to decline in value

You and I must have very different ideas of what the word "extremely" means.

> walking away from the property is always an option

That is only true in twelve states. In the other 38, the lender can sue you to
recover the difference between the house's value and what you owe even after
they foreclose.

~~~
toomuchtodo
As I mention above, you need to do your due diligence. Investing without
knowing the rules is fraught with peril.

I only use non-recourse mortgages when investing in real estate. YMMV.

~~~
TheCoelacanth
The mere fact that you are looking at real estate as an investment rather than
as a place to live indicates that you have far more financial resources than a
typical person. For a typical person it is not a realistic option to discard
their entire social network and move halfway across the country just to get
some more favorable mortgage laws.

~~~
toomuchtodo
You don't _have_ to live somewhere with non-recourse mortgages. To get
started, you only need 3% down, an FHA mortgage, and a 4-plex that cashflows
slightly. You then eventually refi that with something more conventional and
move on to your next property.

Real estate is only one investment vehicle where you don't need a large amount
of capital to realize substantial cash flows. Whenever possible, seek out
leverage opportunities.

~~~
TheCoelacanth
You don't get to choose where you are born or grow up. You are effectively
suggesting that people move a thousand miles away from every single person
that they know just to get more favorable mortgage laws. That is not doable
without starting from a position of privilege.

~~~
JoeAltmaier
As investment, you don't actually have to live where you are buying. I have a
relative 2000 miles away that buys condos in my city as investments. My wife
researches them, reports back and they make a buying decision. There's a
favorable situation here and they're taking advantage of it. Not by
'privilege'; by smart investing.

~~~
TheCoelacanth
If you can afford to buy a house that you aren't even living in, you have far
more financial resources than the vast majority of people. You seem to be
completely deluded about how much a normal person can afford to put into
investments.

~~~
astura
The average person probably shouldn't be buying investment properties anyways.
Running income producing properties is more of a part time job than anything
else. It takes significant effort to find the right property at the right
price with the right renovations in order to make a good profit. Unless you're
really willing to put in the leg work (and usually the "sweat equity"), you're
better off putting your money in index funds or REITs. It takes the right
person to make money in real estate.

I've known several people who wanted to "get into real estate" so they bought
duplexes and became landlords. All of them lost money or broke even because
they went into it without doing their due diligence. My parents ended up just
walking away from their "investment" property and declaring bankruptcy, that's
how much they lost out. It isn't buy property -> profit like people think.

Leverage cuts both ways - it magnifies both gains and losses.

------
llao
I only read the headline but does this use local purchasing power in $
equivalents? If not, I don't see what use that number could be.

~~~
kartan
> If not, I don't see what use that number could be.

There is still value in the comparison. Products like mobile phones are going
to have similar prices around the globe. Also, it affects the capability to
travel.

With my European salary, I can travel anywhere in the world. Norway is more
expensive than Turkey, but I can travel to both.

We had a team member for a secondment that came from a country with lower
salaries. Our company had a policy where you pay first and then you get
refunded. He needed to get all expenses pre-paid because of his full salary
not being enough to pay for the expenses.

If you can buy a house in your country for 2,000 dollars. I can also buy a
house in your country at that price. Probably I can buy a few of them once I
have my basic needs covered in my own country.

So, there are more interesting data points than purchasing power in dollars.
But it is relevant when we talk about wealth distribution.

~~~
toomuchtodo
What is a secondment?

~~~
grzm
> _" Secondment is the assignment of a member of one organisation to another
> organisation for a temporary period. The employee typically retains their
> salary and other employment rights from their primary organisation but they
> work closely within the other organisation to provide training and the
> sharing of experience."_

[https://en.wikipedia.org/wiki/Secondment](https://en.wikipedia.org/wiki/Secondment)

The more common usage I've heard of this word is that someone has been
seconded to another group.

~~~
mattkrause
Another form is “so and so is on secondment to [the new organization]”, as in
“She is actually a naval officer, but is on secondment to the Air Force as
part of an project to standardize repair procedures.”

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RoutinePlayer
But isn't the implication that half of all adults in the world have MORE than
$2300 actually more incredibly awesome?

~~~
chc
It really isn't all that awesome, because that isn't very much net worth at
all. At a minimum, you'd want everyone's net worth to be at least the average
value of a car, I'd think.

~~~
Consultant32452
>It really isn't all that awesome

70% of the world's population lives on less than $10/day. And that is a
significant improvement over most of history. If it's really half of the world
that has $2300 that sounds very promising to me. I guess "awesome vs not
awesome" really amounts to "compared to what?" Compared to the fantasy in my
head of how life could be, it's terrible. Compared to real world history, it
sounds pretty good.

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anoncoward111
I did a lot of manual excel work in sorting and filtering the Credit Suisse
Global Wealth Report after I received it.

An important thing to know here is that this is net wealth, not gross wealth.
IF you have a $500,000 house and a $400,000 mortgage and nothing in the bank
and no student loans and so on, you have $100,000 in net assets.

This is why 33% of Americans and 90% of Russians have less than $10,000 in
assets. Massively, massively in debt, or massively, massively income deficient
relative to someone from New Zealand or Switzerland.

------
tunesmith
This article is confusing to me because it conflates two things I tend to keep
separate in my head - the changing income inequality within one country, and
the income inequality of the entire world, mixed together.

Within a nation you can measure and track inequality with something like the
GINI coefficient, and for nations like the US, inequality has worsened over
time.

Within the world, we've seen massive improvements over time (at least that was
my impression reading Hans Rosling) and it seems rather inexorable that
globalization will make it improve even more over time.

I'm guessing the problem there is like how "privilege can make greater
equality feel like oppression" \- if the levels continue to normalize over
time, then the richer countries will get (relatively) poorer. But if the
richer countries have higher inequality, then that burden will be mostly felt
by the richer countries' poor.

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kevinmannix
This is from 2016. Can we update the title?

~~~
OldSchoolJohnny
Yeah the pace of change lately has me mentally filtering out and avoiding any
articles / posts / news / documentaries older than about 6 months at this
point.

------
ShabbosGoy
What I’ve learned from many people is that land is a valuable asset to have.
Land is naturally scarce with a fixed supply, so it is a decent vehicle for
storing wealth.

Would be cool if you could transfer land titles via blockchain, then you don’t
need a middleman. If you can provide tiny lots to purchase for people who
don’t traditionally invest in land, it could potentially be a great way to
help those who are in poverty build a bit of wealth.

------
dalbasal
Wealth, is wider and more complicated but if we narrow things to "money,"
there's an accounting tautology to take note of.

You borrow a dollar from the bank. You buy something from me for a dollar. I
put it in the bank.

I have a dollar in the bank. You have -1 dollars, a debt to the bank. $0 net
dollars between us. $0 average money-wealth. This is what most money is, debt.
The average amount of debt-created money.

If you keep borrowing from the bank, buying from me, and I keep putting money
in the bank... both sides of our combined balance sheet will keep growing. For
every dollar in my account, you will owe another dollar. The average & sum
will always be 0.

So.. if we are looking at just the money part of wealth, it never grows in
total.

If you borrowed to spend on consumption, then the story ends here. If you
borrowed to buy non-money assets, then you still have those durables. For
example, say you borrowed $1 to buy a house. I built it for you. I have a $1.
You have -$1 _and_ a $1 house.

In reality, it's hard to differentiate between real assets and money assets.
What is a security, really? This part gets hard so I'll leave it at that.

The upshot is that a lot of our collective wealth adds up to $0. For every
dollar someone somewhere has in the bank, someone else owes a dollar. In the
currently prevailing banking/money/governance system, a lot of the debt is
owed by governments so they take a big chunk of the negative side. This leaves
more room for people to own rather than owe money.

If you subtract each persons share of national debt from your median person, I
would expect the number is negative.

~~~
jonknee
> If you subtract each persons share of national debt from your median person,
> I would expect the number is negative.

But that would make no sense because that debt is also owned by other people,
including a lot of citizens.

~~~
dalbasal
Median is generally below average.

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shalmanese
Forget the 3rd world, half of all US renters have less than $5200 in wealth:
[https://www.federalreserve.gov/publications/files/scf17.pdf](https://www.federalreserve.gov/publications/files/scf17.pdf)
(page 13)

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ireadfaces
Did it factor currency value too? An average Indian has a salary of 400$ or
lesser, with which he pulls off a family of 4.

------
lonewolf22
More of us who know a thing or two about financial systems should get in the
wealth redistribution business.

~~~
Torwald
How do you define "wealth redistribution" that you can think it is a business?

~~~
mobilefriendly
It is a business whereby politicians buy votes.

~~~
hexane360
Then they've been doing a very shitty job at it, compared to their deals with
corporations.

~~~
ams6110
They don't have to, because they get the votes anyway. Promises and sympathy
seem to be all that's required.

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josephjrobison
Are all the offshore banking deposits counted in the Swiss wealth?

If so that’s a huge difference maker.

~~~
ghostbrainalpha
How is that a difference maker?

Are you saying that there is a large group of people who have less than $2,000
of 'wealth', but also have Swiss Bank accounts?

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TAForObvReasons
[https://www.gobankingrates.com/banking/savings-
account/62-pe...](https://www.gobankingrates.com/banking/savings-
account/62-percent-americans-under-1000-savings-survey-finds/)

> The overall results from the survey show that 62 percent of Americans have
> less than $1,000 in their savings accounts, and a third of those under-
> savers have no savings account at all. The portion of savers with balances
> over $1,000 is 29.1 percent.

~~~
jandrewrogers
This is because savings accounts are an anachronism from another era and serve
no modern purpose. It is misleading to conflate savings accounts with savings;
no one I know puts their savings in a savings account and many people with
plenty of savings don't have one at all. It would be surprising if most
Americans had and used a savings account in 2018.

In the US, the median disposable income -- money you can either save or spend
on luxuries after all typical living expenses -- is about $1000 _per month_.
Savings are not an issue for the majority of Americans. Unless you define it
as having a savings account with money in it.

~~~
gk1
What do you do with your cash if not put it into a savings account?

~~~
kcorbitt
Not the OP, but I keep 1-2 months of normal spending in a checking account,
and any excess income beyond that goes into investing in index funds. In the
rare case that I need to have a lot of cash available for a big upcoming
purchase, I'll either just keep that in my checking account too or in a money
market account to generate a bit more interest. I do technically have a
savings account, but I can't think of a good reason to use it.

EDIT: maybe if my savings account paid meaningful interest I'd use it more,
but most retail banks these days don't.

~~~
Djvacto
What interest rate does your savings account get?

Most of my savings are for short-term things currently (tuition mostly) and so
it sits in a savings account with one of the higher APY banks (Ally, Alliant
credit Union, and the like). However, when it's money I wouldn't have to pay
back somewhere soon, it would definitely go to index funds.

