How to tell if you’re rich or not

Economists at the University of Chicago alongside the National Bureau of Economic Research, have published a new paper that investigates the best indicators of wealth over the past three decades.

The US-focused report provides interesting insights into how media consumption, consumer behavior, time use, or social attitudes may differ based on education and income levels.

“Our ability to correctly guess one’s education based on consumer behavior has remained mostly stable, with maybe a slight increase over time,” the researchers said.

“This is also true when we attempt to predict education using products and brands separately.”

The researchers found that the products and brands most indicative of someone having attended college are dominated by technological goods.

This is because specific goods reflect waves of technological innovation with the more educated separating themselves from the less educated by being earlier adopters of new technologies, the researchers found.

“For example, personal computers and PC-related devices are more dominant in the early years, while owning a tablet is most indicative of being educated in 2016,” the report found.

“Having bought Kodak film, owning Windows XP, and owning an Apple iPhone are most informative about someone’s education in 1994, 2005, and 2016, respectively.”

Similarly the brand most predictive of top income in 2016 is the ownership of Apple products (iPhone and iPad).

Owning an Android phone (59.5%), an HP printer (58.2%), and a Samsung TV (58.0%) were also highlighted as some of the brands most indicative of being high-income.

Click on image to enlarge.

While the data above is US-centric, you can easily replace certain products or brands with local equivalents – Verizon and AT&T with Vodacom and MTN; Cascade Complete with high-end detergents, etc.

How much money do you need to be considered rich in South Africa?

As highlighted in a previous BusinessTech article, one of the best ways to differentiate the wealth of a South African is to see which bank accounts they qualify for.

South Africa’s major retail banks offer a variety of banking products that cater for all markets – from entry level starter accounts, to mid- and higher-tier accounts that open banking to customers with more varied banking needs.

However, the level of banking that is reserved for the ‘rich’ is the world of private banking, which comes with strict requirements in order to be considered.

For South Africa’s top-rated private bank, Investec, in order to become a client, you need to be a professional (engineer, accountant, lawyer, doctor, etc) and need to apply and let the group run a credit check on you.

The bank does not have a standard base requirement, with its packages catered to individuals based on their financial needs and background. However, a report by the Financial Mail’s Investors Monthly in 2017 mentioned that a prospective Investec client would need to earn a minimum R800,000 a year (R67,000 a month), or have at least R20 million in assets.

Other prominent banks in South African have also stepped up their requirements to enter the world of the elite banking. FNB’s private wealth offering requires that a prospective private client earn R1.5 million per annum or have a net asset value of R15 million or more.

Nedbank Private Wealth carries the same salary requirement (R1.5 million per annum), but brings the necessary net asset value down to R5 million – while Absa’s Exceller Package doesn’t specify a net asset requirement at all, and has the lowest salary barrier of R750,000 per annum (R62,500 per month).

Standard Bank’s Signature account has a minimum salary requirement of R92,000 a month (or just over R1.1 million a year).

The table below outlines the various requirements needed to access private banking in South Africa, as well as an average value based on the numbers.

Bank Annual salary needed Monthly salary needed Investable assets
FNB Private Wealth R1 500 000 R125 000 R15 million
Nedbank Private Wealth R1 500 000 R125 000 R5 million
Standard Bank Signature R1 100 000 R92 000
Investec Private Bank R800 000 R66 700 R20 million
Absa Exceller R750 000 R62 500
Average R1 130 000 R94 100 R13 million

Taking the above into consideration, the value to be considered a HNWI in South Africa is more or less on par with the $1 million used by researchers, in that the average ‘rich’ person who qualifies for private banking, would either have a monthly salary of R94,000 a month – or net assets worth R13 million.

Read: This is how much money you need to be considered rich in South Africa

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How to tell if you’re rich or not