The stock market has been on a steady incline in recent months, with key stock indices hitting record high closings. This comes after the Standard and Poor’s 500 index delivered an annual return of 11.74% in 2016.
Significant gains in the market are a boon for investors, but some are reaping more rewards than others. Wealthy investors who hold long positions in stocks are seeing the value of their portfolios increase on a scale that the typical investor may not be able to match.
Measuring the Rich-Poor Gap
Total family wealth in the U.S. totaled $67 trillion as of 2013, the most recent year for which statistical data are available. According to the Congressional Budget Office (CBO), the top 10% of families – meaning those who had at least $942,000 – controlled 76% of that wealth. Families in the top 50% accounted for 23% of total wealth, averaging $316,000 per family. (See: A Brief History of Income Inequality in the United States.)
That means the remaining half of the population controls just 1% of the nation’s wealth. For families in the 26th to 50th percentile, average wealth totaled just $36,000. Those in the very bottom quarter had zero wealth and were in debt to the tune of $13,000 on average.
Those numbers reflect a broader trend in wealth distribution. Between 2010 and 2015, for example, the rich-poor gap, which measures the differences in annual household income between the top 20% of households and the bottom 20%, increased by $29,200. The U.S.Census Bureau data shows that as of 2013, the highest quintile households earned an annual income of $415,312 while the lowest quintile report an annual income of just…