For the ambitious investor, setting a benchmark for the amount of wealth an individual household needs to accumulate to ascend into the top income bracket is paramount.
You need to make at least $586,900 per year to be considered a top 1% earner in Canada, according to data from Statistics Canada.
The wealthiest households accounted for almost two-thirds (64.8%) of Canada’s total net worthin the fourth quarter of 2024, at an average of $3.3 million per household, while the least wealthy (bottom 40% of the wealth distribution) accounted for 3.3%, at an average of $84,600 according to Statistics Canada
While most of that net worth is a derivative of the assets a household owns, it’s also true that the ultra-wealthy have certain profiles that are worth emulating for those who are interested.
Here are some actionable strategies that can help you build your investment portfolio like the top 1%.
Diversify like the 1%
While most of high net worth households’ capital is tied up in stocks, real estate and alternative assets make up the rest.
Real estate
One of the more common themes among well-to-do households is that a large percentage own real estate.
According to Knight Frank global survey of over 600 wealth managers that manage nearly US$3 trillion in assets, primary and secondary homes account for around 26% of the overall net worth of ultra-high net worth individuals in North America.
So, adding those two asset classes together, it’s clear that investors who own real estate tend to generate much higher gains over time.
Some of that could be due to the forced savings effect that real estate provides. Being a relatively illiquid asset with high transaction costs, those who simply pay their mortgage down each and every month gain a pile of equity (assuming you don’t refinance).Luckily, investing platforms are making it easier than ever to tap into the real estate market.
Invest in creative alternative assets
Ultra-high net-worth individuals and households generally have some form of alternative investment in their portfolio.
Fine art is one investment that consistently outperforms the stock market in the long-run. In fact, according to a report in Fortune Magazine, contemporary art outperformed the S&P 500 with a compound annual growth rate of 12.6% between 1995 and 2022.
Many investors consider it an asset reserved for the top 1%, but that’s no longer the case.
If you’re looking to diversify your portfolio in the fine art and collectibles market, Masterworks is a platform worth considering.
Masterworks is a top platform for retail and accredited investors to purchase fractional shares of artwork by iconic artists like Banksy and Basquiat.
Masterworks’ team scours the art market for the best deals, buys them at a discount, and offers these shares to members.
Their platform is easy to use, and the Masterworks team has been working since 2019 to realize representative annualized net returns like +17.6%, +17.8%, and +21.5% (among assets held for longer than one year). See important Regulation A disclosures at Masterworks.com/cd
How to find the right asset mix
It can be tricky to figure out the right mix of investment types at your individual income level, as variances in net worth and financial goals make generalized advice difficult to follow. If you’re looking for peace of mind, hiring a financial advisor can help you to feel good about your money moves.
Sources
1. Statistics Canada: High income tax filers in Canada
2. Statistics Canada: Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, fourth quarter 2024
3. Knight Frank: The Wealth Report
4. Fortune Magazine: Millennials are discovering this recession-resistant asset of the super-rich—and some indexes show it’s outperforming the S&P 500
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
