The Canadian Press - ONLINE EDITION

Wealth in Canada, globally on the rise

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(Special) - More and more people in the world are becoming wealthy.

According to the most recent report on global wealth by Boston Consulting Group -- suitably titled "Riding a Wave of Growth,"-- the growth of private wealth accelerated across most regions of the world in 2013.

Private financial wealth includes cash and deposits, money market funds and listed securities held either directly or indirectly through managed investments of life and pension assets and other onshore and offshore assets, but does not include investors' own businesses, real estate and luxury goods.

Global private financial wealth grew by 14.6 per cent in 2013 to a total of $152 trillion compared to a growth rate of 8.7 per cent in 2012 due to the performance of equity markets and the creation of new wealth in rapidly developing economies such as such as Brazil, China, India, Mexico, Russia, and others.

The Asia-Pacific region excluding Japan was the fastest-growing region of the world and as in the report's previous years North America and Western Europe were the wealthiest regions of the world at $50.3 trillion and $37.9 trillion respectively.

Private wealth in North America rose by 15.6 per cent in 2013 driven by the strong growth of wealth held in equities and growth of Gross Domestic Product of 3.5 per cent. Wealth grew by 16.3 per cent in the United States but growth was considerably slower in Canada at 8.4 per cent due to weaker stock market returns and a lower share of directly-held equities.

With a projected Compound Annual Growth Rate of 3.3 per cent, private wealth in North America is estimated to reach $59.1 trillion by the end of 2018 with the majority of growth coming from existing assets rather than new wealth.

Building wealth usually doesn't happen by accident. It often requires willpower and long-term vision, keeping your eye on the prize of financial freedom and sometimes sacrificing present wants for the sake of the future.

There are a number of pretty common-sense strategies people can use to help them build wealth such as starting to save early, automating your savings through automatic payroll deduction plans so you don't have the money to spend, maximizing your RRSP, TFSA and pension plan contributions, paying off your credit cards so you never carry their debt, setting financial goals, diversifying your portfolio and living like you're poor - basically denying yourself things that you may like to have now in order to reward yourself in the future.

While many of those principles are still true today, their level of importance and the weight they carry today is different.

"People today are much more aware of the importance of financial planning and are starting the planning process much earlier in life than their parents or older generations did," says Peter Veselinovich, vice-president of banking and mortgage operations with Investors Group. "A financial plan helps people understand their goals and timing and sets in place a plan that can help them have some of their cake today and still have the icing for tomorrow."

Thanks to historic low interest rates, debt is more affordable and is becoming more common place. People are more comfortable assuming debt and are managing it better than they did in the past.

"Previous generations did everything they could to pay off their debt and mortgages - it was their key goal in life," Veselinovich says. "With a five year mortgage at three per cent or less you can invest in safe, conservative things like the banks and get a better return. Today you can make money by borrowing money, which you couldn't years ago."

"The real change today from previous generations is the comfort level people have with debt and how to manage it. People know their limits and, with investments and pensions, can manage it right into retirement."

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Copyright 2014 Talbot Boggs

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