Do you have more financial assets than your average Belgian? If you’re not from Switzerland or the United States of America, chances are you don’t! A recent Allianz study showed that Belgium is the third ranking country when comparing average net worth per capita, which reinforces the belief that Belgians are quite the savers.
In Belgium the average household savings last year hovered around 2,130 Euros. As such, only Norway and Sweden saved more on a global scale. This outcome is no surprise to most Belgians, who have, in general, since long adopted home ownership and savings accounts as a new religion.
As a result, the average net worth of a Belgian citizen is €78,302. The Swiss, however, take the crown by having financial assets worth over €146,540, which is almost twice as much. US citizens own €119,565 and come in second place as a result. The table below provides an overview of most European and developed nations worldwide.
|Country||Net financial assets (per capita)||GDP (per capita)|
|United States of America||119,565||38,088|
When looking at my latest net worth, I’m about the same as most – I was so confused by the difference when I was a child – Australians and Austrians, the French, and your average German. I know, fellow Belgians, I’m letting you down by dragging our average net worth down, but give me another year or two and I will have joined your ranks!
On a global level, households are now worth over 118,000 billion Euros in total, up from last year by 9.9%. Most of that gain is the result of excellent stock market performance in most of the developed countries. The fastest growth occurs in Eastern Europe, Latin America and Asia, as the chart below shows.
What’s interesting is that this chart goes back to the end of 2000. As a result, it starts right behind the dot-com bubble and contains the 2008 financial and economic crisis. Even though the stock markets lost 50% of their value in one year, the compound annual growth rate is still above 4% for Western Europe and about 5% for North America.
The 2008 recession did impact debt levels and growth, as shown below. Western Europe and North America account for about 70% of all global household debts all by themselves. Except for Japan, both Western Europe and North America also have the lowest debt growth of all regions. Eastern Europe, for example, has been growing its debt annually by almost 25%.
Statistics like these are fun, but in and of themselves quite useless. It’s only when we interpret them that they hold value. So what does all of the above actually mean, apart from the fact that Belgians are totally awesome money-saving
bad asses badasses?
First of all, the reported statistics are all averages, which means we should take them with a grain of salt. If ten people have only €1, but one person has €100, the average net worth is €10, even though almost everyone owns only 10% of that average. As such, I fear that the USA household net worth is slightly skewed because of its high income and wealth inequalities. The GDP numbers seem to confirm this theory.
The same might be said for Belgium because it has seen quite a large influx of mega-rich Frenchies like Bernard Arnault, the CEO of Luis Vuitton Moët Hennessy. We do, however, have excellent wealth redistributing mechanisms in place and we are one of the most equal countries worldwide when it comes to income. Switzerland is a special case all by itself, of course.
Second, even with the financial, economic, and sovereign debt crises, the end of the average household net worth trend line points firmly upwards. 4% to 5% compound annual growth is excellent, even though some economic indicators have been blinking red for a long time now. I’d sign up for a guaranteed 5% compound annual growth rate any day of the week.
Third, most of the gains come from the stock market. The report also showed that most Belgians left a lot of money on the table by relying on low interest savings accounts. That’s why it’s a good idea to invest in index funds. Over the long term equities will boost your net worth much higher than other financial assets.
Fourth, the reason why savings accounts aren’t a good way to store your savings long-term is because inflation is still a saver’s worst enemy. Even though inflation levels are at an all time low in Europe, most people see their net worth evaporate by not investing their savings properly. In total this cost all Belgians about 6 billion Euros over the past fourteen years.
Fifth, it appears that debt is an integral part of our lives. This should come as no surprise considering most people take out a mortgage to buy their first house or considering that most businesses use debt to grow and expand. However, when your debt grows at a compound annual growth rate of over 20%, you’re doing something wrong – I’m looking at you Eastern Europe. Debt should be used carefully and responsibly, not to fuel extravagant lifestyles.
So, how do you stack up against those beer-drinking and chocolate-and-waffle-munching Belgians?