The rich are getting richer? Forbes and Sunday Times Rich List Vs S&P 500
Most people assume the rich are getting richer, and that businesses are always the best investment. Why invest in the markets and get about 10%, moreover, when you can run your own business and grow 20%-30% per year?
So, how much richer have the rich gotten in recent years? 20% per year? 30% per year? The answer might surprise you; their wealth has risen slower than the US S&P, Dow Jones and Nasdaq.
In 2007, just before the financial crisis, the richest 12 people on the UK Sunday Times Rich List had a combined wealth of approximately 78.84 billion GBP. Today, the combined wealth of the top 12 is about 158.36billion GBP.
That represents a rise of about 101% in 12 years, or about 6% per year compounded growth.
The US S&P was trading at about 1,300–1,400 in 2007. It is at 2,900 now. It has risen about 119% in USD terms, despite the 2008–2009 collapse, and about 150% in GBP terms.
This means that to keep pace with the S&P, the 12 richest people in the UK, would need to have seen their wealth increase to close to 200billon GBP.
Or put in another way, most average buy and hold investors, have gotten better results than the wealthiest people in the country.
However, the last 12 years has been an extreme time, especially in the UK. So let’s look at a longer data set for the US.