A high-net-worth individual, or HNWI, might be defined differently at certain financial institutions. But in all cases, a high-net-worth individual is someone with a large amount of wealth.

Typically, a high-net-worth individual will have a net worth of at least $1 million. Those with multi-million dollar fortunes are sometimes further identified as very-HNWI (VHNWI) or even ultra-HNWI (UHNWI). Net worth factors in liquid or investable assets.

High-worth individuals often bank at a private bank or with a wealth management firm.

At both types of institutions, high-net-worth individuals may be offered additional services beyond banking and investing. These can include trust services, estate planning and more, often using a team approach.

How net worth is calculated

A person’s net worth is determined by adding up the person’s assets and subtracting any liabilities.

Rick Zimmerman, senior vice president of private banking and commercial lending at Capitol Bank in Madison, Wisconsin, says assets include:

Regarding real estate, the mortgage balance subtracted from the value of your home counts toward your net worth.

“In the investment world [a high-net-worth individual] generally refers to liquid assets,” says Pamela Chen, CPA, CFA, chief investment officer at Refresh Investments LLC in Santa Monica, California. “So it would be investment accounts and banking accounts.”

How is high net worth determined?

Different financial institutions might have different criteria for designating high-net-worth individuals. Capgemini’s World Wealth Report broadly includes anyone with $1 million or more in investable wealth in the HNWI category.

Capitol Bank uses a three-pillar approach to identify a high-net-worth individual. Zimmerman says those three pillars are:

  • Income (of at least $250,000 or greater)
  • Investable assets/investments (of at least $500,000)
  • Net worth ($1 million or more)

“Those three pillars are really the guidelines that we use in our bank to define a high-net-worth individual and somebody that’s eligible for private banking services,” Zimmerman says.

But people don’t have to meet all three to be considered HNWIs.

Some institutions further distinguish between HNWIs, very-high-net-worth individuals (VHNWIs) and ultra-high-net-worth individuals (UHNWIs). The net worths associated with each tier, according to the World Wealth Report, are:

  • HNWI: $1 million to $5 million
  • VHNWI: $5 million to $30 million
  • UHNWI: $30 million or more

Key statistics

In September 2022, the Credit Suisse Research Institute published its annual Global Wealth Report, which includes data on HNWIs. Credit Suisse defines ultra-high-net-worth individuals as those with $50 million or more in liquid assets.

Insights from this report include:

  • In 2021, there were 62.5 million HNWIs, an increase of 5.2 million from the previous year.
  • HNWIs account for about 1.2 percent of the population, but their share of global wealth is nearly half (48 percent).
  • Most HNWIs (87 percent) have wealth between $1 million and $5 million.
  • There were about 264,200 UHNWIs in 2021, accounting for roughly 0.4 percent of all HNWIs.
  • The U.S. ranks the highest in terms of wealth, with more than 140,000 UHNWIs. China ranks second, with more than 32,000 UHNWIs.

How do you become a high-net-worth individual?

Becoming a high-net-worth individual could take many years. In most cases, hard work, saving and investing play a significant role.

Or under the right circumstances, such as these, it could almost happen overnight.

  • Inheritance
  • Winning the lottery or other prize
  • Life insurance
  • Winning a lawsuit
  • Getting married
  • Selling a business
  • Capital gain

While most people likely won’t be considered high-net-worth individuals, just about anyone can use smart budgeting and saving strategies to improve their financial status over time.