Claim 7 of 22
Assets or salary: wealth comes from owning assets
Does wealth come from what you own or from what you earn?
Verdict
Weak diagnosis
The arithmetic is true, because wealth is held in assets and the households holding more assets have more wealth. In Great Britain the two largest holdings are the home and the pension (April 2020 to March 2022), and in Australia owner-occupied dwellings made up 40 per cent of household assets and super 18 per cent (2019–20). Homes and pensions are usually paid for from earnings (inference by this audit), so the evidence presents salary and assets as parts of one process and the claim sets them against each other.
What it leaves open. The data record who holds an asset and say nothing about how the holder obtained it, so where the first deposit came from stays open.
Made by: Kiyosaki, Edge, DeMarco, Gow, Jorgenson.
Test it on your own numbers
- United States: Federal Reserve, Changes in U.S. Family Finances from 2019 to 2022 (federalreserve.gov/publications/files/scf23.pdf), to compare your net worth with your age group's median in Table 2.
- United Kingdom: ONS, Household total wealth in Great Britain (ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/totalwealthingreatbritain/april2020tomarch2022), to compare your household's wealth with the medians by age and tenure.
- Australia: ABS, Household Income and Wealth, Australia (abs.gov.au/statistics/economy/finance/household-income-and-wealth-australia/latest-release), to compare your household's net worth with the mean for your age group.
The full test, with every figure dated and sourced, is in chapter 7 of the book.