what is the average net worth of uk individual/family

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  • td_007
    td_007 Posts: 1,212
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    EdInvestor wrote: »
    Shall we say around 150,000 Euros per head?

    There is inherent fallacy in considering the value of the house one lives in net assets category - as it will only be available if one sells it which means no roof over the head! Hence, even if the number of house owners might be higher in the UK, one has to first of all subtract the outstanding mortgage and if the house is owned outright, then consider only the difference between the value of the present house versus to one they could potentially buy (down-size) as net asset.

    Over a trillion pounds debt and Eur £150K per head just do not seem to jive....
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    project500 wrote: »
    I don’t believe it ,I think there is a lot more debt about than is portrayed in these figures

    Don't forget that 40% of owner occupied property is owned outright with no mortgage.

    IMHO people also don't realise that the levels of prosperity in the Uk have been steadily rising for around 15 years now.Don't forget there was a long period pre credit crunch when the economy was stable, with rising employment and wages, low inflation and interest rates and low basic costs (eg food, gas and elec).

    Then there was the massive crash in the prices of consumer goods caused by the China effect. The price of everything from computers and DVDs to home wares to clothes and shoes has plummeted. The advent of stores like Primark means that even someone on benefits can afford a couple of new fashion items a week.;)

    People notice that there are a lot more items like plasma TVs and smart cars around and think it's all based on debt.But disposable income has been quite high for years and when prices crashed, such goods became affordable to many people.

    Add to that the fact that most families have two incomes and that young people are much better educated so can get better jobs and earn more, and it's not hard to see why we are at or near the top of the European wealth list :)
    Trying to keep it simple...;)
  • Aegis
    Aegis Posts: 5,688
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    td_007 wrote: »
    There is inherent fallacy in considering the value of the house one lives in net assets category - as it will only be available if one sells it which means no roof over the head! Hence, even if the number of house owners might be higher in the UK, one has to first of all subtract the outstanding mortgage and if the house is owned outright, then consider only the difference between the value of the present house versus to one they could potentially buy (down-size) as net asset.

    Over a trillion pounds debt and Eur £150K per head just do not seem to jive....
    A house isn't great to use as liquid personal wealth for the reasons that you've identified, but it definitely counts as an asset. Even on a company's balance sheet the buildings would count as assets, just not short-term ones.
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • Bogof_Babe
    Bogof_Babe Posts: 10,803 Forumite
    Aegis wrote: »
    You're thinking of state pensions. State pensions are paid for as required from national insurance contributions. Anything we put into our own pension pots is ours. Final salary schemes become a little tricky because the company effectively has to stay in business to keep paying their retired employees if there is a deficit. Defined contribution schemes are much more straightforward.

    I actually meant final salary schemes (such as I have, albeit frozen until I reach 65). If it goes into deficit due to the longevity of current pensioners, there's no guarantee there will be anything left when my turn comes. If current employees all boycotted the scheme (assuming it was still open to new members) the money would soon run out.

    Point taken about defined contribution pensions though. They "have your name on it" presumably. Then it's only the skill of those investing your money that determines how much you get at retirement, so although you might have a decent sized fund, the return is still an unknown isn't it?
    :D I haven't bogged off yet, and I ain't no babe :D

  • gozomark
    gozomark Posts: 2,069 Forumite
    what about the per capita amount of UK state debt....
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    Bogof_Babe wrote: »
    I actually meant final salary schemes (such as I have, albeit frozen until I reach 65). If it goes into deficit due to the longevity of current pensioners, there's no guarantee there will be anything left when my turn comes.

    There is now, via the Pension Protection Fund.

    However you cut it, non state retirement savings are always seen as part of household assets, as is property.

    You can always purchase housing services by renting.If you sell your property and invest the money and use the interest to pay the rent, you still have that capital.
    Trying to keep it simple...;)
  • gozomark
    gozomark Posts: 2,069 Forumite
    but who provides the guarantee on the Pension Protection Fund ? Other UK citizens
  • td_007
    td_007 Posts: 1,212
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    EdInvestor wrote: »
    IMHO people also don't realise that the levels of prosperity in the Uk have been steadily rising for around 15 years now.Don't forget there was a long period pre credit crunch when the economy was stable, with rising employment and wages, low inflation and interest rates and low basic costs (eg food, gas and elec).

    It is not really clear how much of it was "real" rise and how much of it was fueled by the credit bubble which finally burst. The reality is people could afford to buy houses and too big ones which could not actually afford because of easy credit, they could splurge in shopping because of easy credit, spend big on holidays because of easy credit. Now when credit has become tight you see the number of repossessions rising, retail spend at its lowest ever, holidays cut down drastically.

    Really one should be asking how much "disposable" assets do people have - hard cash saved and what can be sold off without cutting back their present quality of life.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    edited 26 July 2009 at 9:37PM
    td_007 wrote: »
    It is not really clear how much of it was "real" rise and how much of it was fueled by the credit bubble which finally burst.

    It is actually clear.The figures quoted in the survey and in the Govt's household wealth survey are net of debt.There simply wasn't as much debt as you think in comparison with the value of the assets.

    Repos so far are less than 1% of total mortgages - if people were in real trouble you'd expect a far higher percentage than that.

    I think quite a few people think the spending had got a bit unbalanced - it was leading to quite a lot of waste for a start - so some people have taken steps to moderate this - eg by paying down debt/mortgages voluntarily while interst rates are so low..But most of them are not forced to do this, they just think it's sensible especially while savings rates are so poor.
    Trying to keep it simple...;)
  • td_007
    td_007 Posts: 1,212
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    Aegis wrote: »
    A house isn't great to use as liquid personal wealth for the reasons that you've identified, but it definitely counts as an asset. Even on a company's balance sheet the buildings would count as assets, just not short-term ones.

    It is indeed an asset however including it as an indicator of wealth particularly when the majority of it has been financed by mortgage just provides that false sense of wealth.Business want to show a great balance sheet, and will include all their immovable assets so will politicians use the the statistics quoted above to claim credit for something that is just make-believe.
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