The average household net worth of Canadians topped $400,000 for the first time in 2012, rising 5.8% to $400,151. But for financial professionals, the better news may be that the increase in wealth was much more balanced between real estate and liquid investable assets.
“It wasn’t really as biased [toward real estate] in this past year as it has been in most, it was more evenly split between real estate and liquid assets,” Environics Analytics senior research associate Peter Miron told WP. “There was a little bit more growth in liquid assets in 2012 due to the strong stock market performance, unlike the year before when it was a little bit flatter.”
Not only do Canadians have more investable cash, but with securities outperforming real estate they may consider investing some of that extra money in securities rather than buying a new home.
While improved markets led to an increase in portfolio valuations, Miron, who was lead developer of Environics WealthScapes 2013 database, said there was also saw an increase in savings and slower accumulation of debt, especially non-mortgage consumer debt. “People were socking away more money into the markets.”
A strong 5.4% increase in liquid assets outpaced the 5.1% increase in real estate, and there was a relatively modest 3.3% rise in debt. Average household liquid assets rose to $210,385 by end-2012 and the average value of real estate was $309,881.
“Savings generally includes the kind of products you get at bank branches [savings, chequing and term deposits], while the investment component is traditionally that portion that is more advisor managed, although that line is now blurring a little bit,” said Miron.
Much of the growth in liquid assets can be attributed to the robust stock market: Between the end of 2011 and 2012, the average household saw the value of their stocks rise 5.6% and investment funds increase 8.9%. (For full data see p.2)
Canadian investors benefitted from the rebound in the US economy and financial markets and, despite the continuing euro crisis, improving economic news from Europe. “Last year was marked by a small but noticeable global economic recovery,” said Miron, “with the US recovery starting to take hold at the end of 2012.”
Continued on p.2