A Comparative Study On The Asset Allocation Of Wealthy People In China And The United States

With the rapid development of China’s economy, the income level of residents is increasing rapidly and results in more and more wealthy families. A sharp increase in household wealth has led to a rapid increase in the demand by wealthy families for better allocation of assets. Reasonable asset allocation has not only helped wealthy families in maintaining and increasing the value of assets, but also played an important role in the stability of the whole financial system as well as the development of social economy. Therefore, the research on the asset allocation of wealthy families has important theoretical and practical significance. It is helpful for the wealthy families to be guided on the rational allocation of assets, for the national government to make and adjust national macroeconomic policies so as to improve the financial market mechanism, and for financial institutions to create new financial instruments for the development of new business areas.Most of the rich families with wealth of more than one million US dollars are residents in China and the United States. Therefore, the asset allocation of wealthy families in the United States has an important reference value for the study of the asset allocation of wealthy Chinese families. It is not difficult to find that the asset allocation of wealthy Chinese families is similar to that of the wealthy US families in some areas, but there are still some differences in many other aspects. First of all, there is a clear difference in the structure of asset allocation between the wealthy families of China and those of the United States. The allocation of financial assets of wealthy families in the United States is more balanced, which is helpful for reducing risks and improving the turnover of capital. In contrast, about 16% of the financial assets of China’s wealthy families is concentrated in cash and savings(while that of the US wealthy families is only 7%). The proportion of assets in the form of real estate by US is quite similar to that held by Chinese wealthy families, but wealthy families in United States have more commercial real estate holdings, while the Chinese wealthy families hold a larger proportion of residential real estate. Secondly, the way Chinese wealthy families hold assets in the form of stocks is different from US wealthy families. Forty-four percent of the total assets held by the US wealthy families are assets in the form of stocks, while that for the Chinese wealthy families is only 23%. Stocks directly held by the US wealthy families account for only 10% of their total assets, while in China it is 21%. Wealthy families in the United States rely mainly on financial intermediaries for the management of their financial investment and 34% of their total assets are in the form of stocks they hold indirectly, while stocks held indirectly by the Chinese wealthy families account for only 2% of their total assets.The differences between the Chinese wealthy families and the US wealthy families in asset allocation are mainly the results of the different levels of financial development, social security systems and the investment environments of both countries, but they are also related to the different investment beliefs of the wealthy families. Wealthy Chinese families’ asset allocation is reasonable in some way but, compared with that of the United States, there are areas that need improving. It is necessary for China to learn from the experience of the United States and, based on its own national conditions, make changes on any unreasonable factors related to the asset allocation of the wealthy families and optimize their asset allocation structures. To this end, it should be carried out at the two levels of government and family. At the government level, we should further standardize and develop the capital market, establish and improve the social security system, and encourage financial innovation to meet the different needs of the wealthy families’ asset allocation. As for the wealthy families, they should adapt to the trend of economic and social development, make necessary changes on their investment beliefs, reduce the proportion of cash and bank deposits, change the way of investing in stocks, improve the proportion of insurance products to enhance the level of security, and increase the proportion of risk assets to obtain greater benefits.