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What Are High-Net-Worth Individuals?

Key Points

HNWIs have $1 million+ in liquid assets, offering investment management flexibility.
Estate and tax planning are critical for HNWIs as wealth increases.
About 8-10% of U.S. households qualify as HNWIs, indicating potential financial goals.

High-net-worth individuals (HNWIs) are people who have amassed investable (liquid) assets of $1 million or more. “Investable,” in this context, means their assets can be converted to cash within a reasonable time -- think cash, stocks, bonds, and some real estate investments.

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Large pile of hundred dollar bills. — Image source: Getty Images

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Liability

When it comes to evaluating a business, a liability is really just a one-word description of what a company owes to other parties.

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While the asset side of the equation is important, a HNWI might also have excessive liabilities exceeding $1 million. Or they might have illiquid assets of more than $1 million but lack investable cash. This is why the distinction is key: You’ll need to have at least $1 million in investable assets to be considered a HNWI.

The standard HNWI scale includes people with liquid assets ranging from $1 million to $5 million. You’re considered a very-high-net-worth individual if you have liquid assets between $5 million and $30 million, and an ultra-high-net-worth individual if you have liquid assets topping $30 million.

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Liquidity

Liquidity is the extent to which an asset can be bought or sold quickly without affecting the asset's price. Here you will learn how the importance of liquidity and how to calculate it.

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Some HNWIs require more complex investment services to manage, preserve, and increase their wealth. Estate and tax planning become significant pieces of the equation once you’ve hit the eight-figure mark in net worth. These people might also receive access to exclusive investment opportunities, like hedge funds and private equity placements.

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