SigFig Insights report finds stark wealth inequality even among those rich enough to invest

It’s probably not news to any of us that wealth is not equally distributed. In fact, it’s highly skewed—but just how lopsided is it? For this quarter’s SigFig Insights report, the data team investigated the profile and behaviors of the most wealthy of investors and the least wealthy of investors.  

According to findings, investors in the wealthiest quartile have on average 348 times more wealth than the average investor in the least wealthy quartile.

average wealth

Other key comparisons and findings include:

  • Top 50 percent versus bottom 50 percent: When comparing the top 50 percent of investors with the bottom 50 percent of investors, the top half owns 97 percent of the total wealth, with the bottom half owning the remaining 3 percent.
  • Top 25 percent versus bottom 25 percent: On average, the bottom 25 percent of investors owns $4,600 in assets, while the top 25 percent owns $1.6 million.
  • Top 1 percent versus median investor: On average, the top 1 percent of investors owns $12 million in assets, which is 145 times greater than the assets owned by the median investor ($83,000).

chart-blog

Not only do we see a gap in amount of wealth, the report also reveals differences in investment behavior. The wealthy, top 25 percent of investors tends to churn their portfolio less, pay lower fees, and handle market volatility better—all of which are factors that lead this group of investors to achieve higher portfolio performance. The top 25 percent of investors saw returns that were more than two times higher than the returns of the bottom 25 percent of investors.

Even among those with the means to invest, we see a surprisingly unequal balance of wealth and differences in investing behavior. While we may not know the exact reasons behind this divide, we do see that wealthier investors tend to practice sounder investment strategies, like avoiding unnecessary fees and staying put even when the market dips—strategies that can be employed by any investor.

You can read the full report here.

Screen Shot 2015-10-07 at 1.02.57 PM

 

 

About the SigFig Insights Report

The analysis in this report is based on data aggregated and anonymized from 330,000 investors who have synced their portfolios with SigFig. Results are net of all management fees and expenses unless otherwise noted. Performance data includes reinvestment of dividends and interest unless otherwise noted. Past performance is not indicative of future returns. Direct comparisons between performance and equity market indices are not without complications. The indices may be unmanaged, may be market weighted, and unlike advisory clients, indices do not incur fees and expenses. Technical details are available upon request.
SigFig Insights
Understand risk, maximize returns, minimize fees.
SigFig will show you how.