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Canada's millionaire club swells, along with share of nation's wealth

Briefing highlights

  • Millionaire households on the rise
  • Number forecast to climb by 2021
  • Amazon to buy Whole Foods
  • Markets at a glance
  • Hacker linked to attacks on miners, casinos

Who wants to be ...

Canada is churning out millionaires who are projected to hold an increasing amount of the nation’s wealth.

Which, when you put a couple of different reports together, means some of us are getting richer and others of us are buried in debt. Or possibly both.

According to the latest annual study by The Boston Consulting Group, Canada now ranks as No. 5 in terms of the number of millionaire households. At 485,000 of such families in 2016, that’s a jump from the No. 8 spot a year earlier, when there were 385,000.

Those households now account for 3.5 per cent of Canadian families, and hold 32.5 per cent of the country’s wealth. And by 2021, Boston Consulting projects, that will climb to 785,000 millionaire households, representing 5.5 per cent and accounting for 38 per cent of the wealth in Canada.

Here’s another way of looking at it, which tells you something: The compound annual growth rate from 2016 to 2021 would be about 10 per cent for the number of those households, more than 9 per cent for their representation among Canadian families, and just 3.2 per cent for the share of wealth they hold.

Also this: Those families with less than $1-million will, according to the forecast, see compound annual growth in wealth of 1.5 per cent between 2016 and 2021. That rate rises to 7.9 per cent among households with wealth of between $1-million and $20-million. It comes in at 3.3 per cent for families in the $20-million to $100-million category, and 4.7 per cent for those in the $100-million-plus club.

(Based on those returns, I’m tempted to say it would suck to be in the 20-100 category, but for the fact that you’d be in the 20-100 category.)

These are households with more than $1-million (U.S.) in wealth, which looks at financial assets including life insurance and pensions but, for example, excludes real estate.

(Too bad, that. We own a detached home in Toronto, which automatically makes me a millionaire, but I can’t call myself one.)

“One reason for Canada’s advance was the rise of Canadian equities in 2016,” the Boston Consulting report said.

(Of course, given that Canadian stocks are now underwater halfway through 2017, we’ll see what next year’s report shows.)

The Boston Consulting report helps wealth managers around the world in their businesses. Indeed, there’s a large section devoted to the manager of the future.

What it’s not meant to do is highlight inequality issues, but it could certainly feed into the debate.

It also comes alongside the most recent report on wealth and debt from Statistics Canada, which showed financial assets driving up the net worth of Canadian families.

On a per-capita basis, according to the agency, household net worth rose in the first quarter to $287,700. That’s in some ways meaningless, of course, because it’s just $10.5-trillion broken down on an equal basis in a country of unequals.

That Statistics Canada report also showed we’re still borrowing big, which could well see some of us get into deep trouble on the off-chance of a shock.

As The Globe and Mail’s Rachelle Younglai reports, the key measure of debt to disposable income eased just slightly in the first three months of the year, to 166.9 per cent from 167.2 per cent in the fourth quarter.

Which means we owe about $1.67 for every dollar of the money we have to play with.

And it was just this week that the Bank of Canada signalled that higher interest rates could come earlier than expected.

“The cost of servicing debt has remained broadly unchanged in recent years, but households’ sensitivity to rate hikes is likely greater now than it has been in previous tightening periods – principal payments take a greater share of disposable income than interest costs (for now) and interest payments on non-mortgage debt exceed mortgage interest (despite accounting for only a third of total debt),” said Royal Bank of Canada economist Laura Cooper.

“Non-mortgage debt tends to command higher borrowing rates and variable payments, leaving households increasingly vulnerable to a looming uptrend in interest rates,” she added in a report on the Statistics Canada findings.

“Encouragingly, higher rates will reflect a strengthening economy, and attendant income gains are expected to support households’ ability to absorb higher costs. But vulnerabilities continue to brew under the surface of the headline $10.5-trillion in household net worth.”

Markets at a glance

Amazon to buy Whole Foods

Shares of North American grocery companies are sliding in the wake of Amazon’s blockbuster deal for Whole Foods Market Inc.

The online retailing giant unveiled the $13.7-billion (U.S.) deal for Whole Foods this morning, offering $42 a share cash.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Amazon chief executive officer Jeff Bezos said in a statement announcing the agreement.

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