The 1% Club: What It Takes To Be Rich In The Lucky Country

The pathway to growing wealth in Australia is changing, with new research revealing that the amount of money you need behind you to be in the top one percent of wealthiest people in Australia has doubled over the past two years.

While many households across the country are battling the rising cost of living pressures, it has been revealed that 2.2 million Australians have amassed at least $8 million in money and assets, up from $4 million in 2021. This status places them in the list of the nation’s High Net Wealth Individuals.

The data, revealed in this year’s Knight Frank’s Wealth Report, gives anyone interested in wealth fascinating insights into just how much money it takes to reach the one percent threshold across the world. The report reveals that Australia now ranks as third for the money required to be in the top one percent, up from seventh in 2021,

sitting behind Monaco in top place and then Switzerland.

In Monaco, it takes $18.1 million to be considered rich, but bear in mind that the nation has long been considered a tax haven, with residents avoiding income and capital gains taxes.

Finance experts are adamant that the fundamentals that help you get rich haven’t changed — the wealthy purchase property, pay down their debt, stick to a budget and utilise the tax offsets that exist within the nation’s superannuation system to build their wealth.

Sounds simple enough, but amid a cost of living crisis, it’s not quite so straightforward.

The power of money

Rachael Evans entered the realm of HNWIs a few years ago, admitting that she takes a structured approach to building and managing her wealth.

Money isn’t just a functional, tangible thing. There’s energy associated with it, she says.

“The first thing that you have to get your head around is that money wants structure, so if you don’t have rules that govern your money, it will not stay with you, no matter how much you earn,” she says.

The CEO of four-day work week consultancy, 4 Days 4 All, and business coach always pays herself first as the owner of her business, and then allocates what’s left over back to the business.

“Most business owners do it the other way around, which leaves owners with a very small portion left over, if anything,” Evans says.

Evans and her husband aim to be debt free by the time they reach 55 years of age, and have reverse engineered their finances based on that to allocate what’s needed to pay off her investment properties.

She has a team of experts

< to help her achieve that goal. “What’s changed over the past five years is the value that I place on the people we hire to advise us, such

as our property adviser, financial adviser and our accountant. There’s far too many financial advisers out there advising others on how to handle their money based on theory because they don’t actually have any skin in the game.”

Investing in herself is also critical, so she sets aside up to 10 percent
of her annual revenue in business- related coaching for herself and her team.

Millionaire status

Melbourne businessman Ryan Watson has reached the HNW status. The founder of financial advice firm Tribeca Financial admits that it dawned on him that he had reached a financial milestone that he considered to place him among other wealthy Australians about four years ago. He’s since stepped down to working four days a week and likes to spend his money on buying experiences, like travelling with family when he can.

The business has nearly 1,000 clients and has an annual turnover in excess of $5 million. Being in a position to build the financial literacy of his clients spurs him on.

“I have been able to build my personal wealth from receiving a small inheritance in 2002 to today where I’m now worth 8 figures,” he says.

A key plank in wealth-building has been his focus on diversifying his investments. He’s also not risk averse, buying shares in lithium companies nine years ago.

“It’s certainly not been an overnight success, the shares have gone up and down over the years, but with the advent of electric cars, they make a lot of sense at the moment,” Watson says.

The forced discipline of structuring his finances so that he’s always paying something off also appeals to him. Right now, he and his wife pour a minimum off 33 per cent of their income into paying off their principal residence.

“The responsibility and commitment of paying back debt works well for us,” he says.

Rich getting richer

The mega-rich are also getting richer. People with a net worth of more than $43.8 million is a category of wealth expected to grow by 40.9 percent over the next five years from 17,456 in 2022 to 24,589 in 2027. That’s almost 3,000 additional UHNWIs than the 31.1 percent growth over the past five years.

A large contributor to the top one percent wealth doubling in Australia over the past two years has been prime residential property performance recording an upward trajectory, resilient despite the rising cost of finance, with half of this cohort tending to be cash buyers.

“The level of wealth required to reach the wealthiest one percent varies extensively, depending on where you live in the world, but it has risen across the board … reflecting the growth in wealth portfolios over the past two years, despite the dip in 2022,” Knight Frank’s head of residential research Australia, Michelle Ciesielski says.

“We can’t underestimate how much the pandemic brought forward decision making, rebalancing of portfolios and re- evaluating how much time is spent in Australia going forward, given many spent longer periods of time grounded at home than they had over the past decade,” she says.

“On average, the UHNWI population in Australia owns 2.9 homes, or equivalent to 36 per cent of their total wealth is in primary and secondary homes.

“For their investible wealth, 94 percent of their portfolios tend to be held in Australia, 34 percent is in some form of commercial property ownership, while 21 per cent is in equities.”

In our 20s, my new husband and I took a year off from our fledgling careers to travel in Southeast Asia. Equipped with paper maps, we began in China and improvised each day’s “itinerary” on the go. A gap year for grown-ups, I called it, although I scarcely qualified as one.

Nearly 40 years later, we are new retirees with the same wanderlust. We wondered: Could we recapture the thrill of winging it, enduring rough roads and cheap hotels?

We could and did, but for 2½ months instead of 12. We mapped out a route that would take us up Africa’s east coast and then—who knows where? Here’s how we rolled and five important lessons we learned on a 6,000-mile trip.

Kenya: Live large by day

Our first stop was the tiny, car-free island of Lamu, well-known for its high-profile visitors, from Kate Moss to the Obamas. This low-key getaway offered white-sand beaches, dhows — boats you can rent for day cruises and snorkelling — and lots of donkeys, the main mode of transport.

We considered the beachside Peponi Hotel in Shela, a hot spot since the 1960s (Mick Jagger bunked there). But room rates start at $250, far above our per-night budget of $70 or less. When contemplating almost 100 nights of travel, price matters.

So we chose a villa in the dunes called Amani Lamu, $61 per night for an en suite room with a private terrace and shared plunge pool.

We still had a cool Peponi moment come sunset: On the hotel’s whitewashed veranda, we sipped Pepotinis and plotted our next day’s interlude at the Majlis, Lamu’s fanciest resort (from $580).
With a $20 day pass, we could lounge around its pools and beach bars like proper resort habitués.

Lesson learned: Live like billionaires by day and frugal backpackers by night.
Must-go: Across the bay on Manda Island, bunk a night in a thatched-roof bungalow on stilts at Nyla’s Guest House and Kitchen (from $48 with breakfast).
After a dinner of doro wat, a spicy Ethiopian chicken stew and rice, the sound of waves will lull you asleep.

Egypt: Ask. Politely.

From Lamu, we flew to Aswan in Egypt. Our “plan”: Cruise down the Nile to Luxor, then take a train to Cairo, and venture to Giza’s pyramids.

Turns out it’s the kind of thing one really should book in advance. But at our Aswan hostel, the proprietor, who treated us like guests deserving white-glove service, secured a felucca, a vessel manned by a navigator and captain-cum-cook. Since we’d booked fewer than 24 hours in advance and there were no other takers, we were its sole passengers for the three-day trip.

One day, we stopped to tour ancient temples and visit a bustling camel fair, but otherwise, we remained on board watching the sunbaked desert slide by. We slept on futons on the deck under the stars. The cost: about $100 per night per person, including three meals.

Lesson learned: Ask for help. We found Egyptians kind and unfazed by our haplessness, especially when we greeted them respectfully with assalamu alaikum (“Peace to you”).
Must-go: For buys from carpets to kebabs, don’t miss Cairo’s massive Khan el-Khalili bazaar, in business since 1382. We loved the babouche, cute leather slippers, but resisted as our packs were full.

Turkey: Heed weather reports

Next stop Tunisia, via a cheap flight on EgyptAir. We loved Tunisia, but left after six days because the weather got chilly.

Fair enough, it was January. We hopped continents by plane and landed in Istanbul, where it snowed. Fortunately, two of Istanbul’s main pleasures involve hot water. We indulged in daily hammams, or Turkish baths, ranging from $30 to $60 for services that included, variously, a massage, a scrub-down and a soak.

Beneath soaring ceilings at the temple-like Kılıç Ali Paşa Halamı, brisk workers sternly wielded linen sacks to dowse my body in a cloud of hot foam.
In between visits to Ottoman-era mosques and the city’s spice markets, we staved off the chill by drinking fruity pomegranate tea and sampling Turkish delight and baklava at tea salons.

A favourite salon: Sekerci Cafer Erol in Kadıköy, a ferry-ride away on the “Asian” side of Istanbul, where the city adjoins Asia.

Lesson learned: Pay attention to the weather gods. We foolishly took the concept of travelling off-season too far.
Must-go: Don’t miss the Istanbul Modern, the Renzo Piano-designed art museum in the historic Beyoğlu district.

Cambodia: Chill out

After a long flight from Istanbul, we spent two weeks in Laos and then hopped another plane to Cambodia, specifically Koh Rong Sanloem, another car-free island.

Like vagabonds, we lolled by the warm, super-blue water of Sunset Beach, steps from our bungalow at Sleeping Trees (from $54 per night).
A caveat: You have to sweat to get to this island paradise. We took a bus, a ferry and then hiked for 40 minutes up and down a steep hill and through a jungle. You’ll find only a handful of “resorts”—simple bungalow complexes like ours. There’s nothing much to do. I’ll be back.

Lesson learned: Until our week in Cambodia, we’d been travelling too much and too fast, prioritising exploration over relaxation. This island taught us the pleasures of stasis.
Must-go: Spend one day in Cambodia’s capital city, Phnom Penh, to delve into its sobering history. Tour the Choeung Ek Genocidal Centre, site of a Killing Field, where nearly 9,000 Cambodians died.

Thailand: Be a frugal hedonist

We spent our last two weeks on the island of Ko Samui, where season three of “The White Lotus” was shot.

We went there for its astounding beauty, not the luxury resort experience that comes with too many boisterous lads on vacation, snake farms and traffic jams in town.

Truth be told, we flouted our budget rules to book an Airbnb with a pool (from $300) in the hills of Lipa Noi on the island’s quiet side. We joined the nearby Gravity Movement Gym to work out, but cooked our own meals to keep our final tabulation of expenses within reach.

Lesson learned: Pinching pennies feels restrictive, no matter how lush the surroundings. And it leads to bickering, as partners tally up who squandered how much on what.
With the end in sight, we splurged on the villa and even bought souvenirs, knowing we’d lug them for days, not weeks.
Must-go: Take the 30-minute ferry to sister island Ko Pha Ngan for its peace, love and yoga vibe and, once a month, full-moon parties.
Via Airbnb, we bunked at a Thai house called Baan Nuit, run by the Dear Phangan restaurant proprietors.

We sampled steamed dumplings, white fish in a Thai basil sauce and spicy noodles for a mere $15 apiece.
Hey, indulge in that “White Lotus” moment if you dare!