If Your Net Worth Grew Less Than 5% Last Year, You're Sliding Into a Lower Wealth Tier
KEY TAKEAWAYS:
Even 5% growth, while encouraging, is on the low side
If your net worth grew less than 5%, you’re falling behind the top half of the country
Inflation makes increasing your net worth more challenging
Stocks are one of the best asset classes for building long-term wealth
A 5% jump in net worth is normally something to be proud of, but over the past year it means you may have fallen behind the rest of the country on a relative basis.
From the first quarter of 2025 through the same period a year later, Federal Reserve data (FRED) shows that the top half of American households saw their wealth grow faster, while only the bottom 50% grew more slowly. Here's why the bottom 50% is sliding into a lower wealth tier.
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A 5% Gain Was Actually on the Low Side
Per FRED, the net worth of the top 1% jumped about 10.1% over the past year, making it the most successful group in terms of wealth gains. Households in the 90th through 99th percentiles saw growth of about 8.3%, while those in the 50th through 90th wealth percentile enjoyed a net worth increase of 5.4%, also according to FRED.
Compared with these numbers, if your net worth grew less than 5%, you’re falling behind the top half of the country. Those in the bottom 50% fared the worst, with their average net worth rising just a shade under 5%, at about 4.3%, per FRED.
Those are averages. They don’t mean that every household in each group earned the same return or even that individuals stayed in the same percentile range during the year. In aggregate, they show how quickly wealth grew across different parts of the economy.
Inflation Raises the Bar
According to the U.S. Bureau of Labor Statistics, consumer prices rose 3.4% from August 2025 through August 2026. A household whose net worth rose only 2% over that period wouldn’t be able to buy as much on a relative basis in August 2026, even though it would have more nominal dollars.
The data proves that while rising household net worth is a good thing, in an inflationary environment, the raw numbers aren’t as impressive. A 5% growth in net worth doesn’t allow you to increase your quality of life if all of the prices around you have risen by 6%, even if you technically have more dollars in your bank account.
Stocks Can Create a Much Bigger Gap
Stocks are one of the best asset classes for building long-term wealth and they are owned mainly by those in the top wealth brackets. As of the first quarter of 2026, the top 1% owned 50.2% of corporate equities and mutual fund shares, according to FRED. The top 10% owned nearly 90% of those types of assets. Meanwhile, the 50th through 90th percentile group held just 11.6%.
This disparity is a contributing factor to the wealth gap in America. If the top 10% of households own the most equities, they are the ones who benefit disproportionately. In this scenario, a rising tide does not lift all boats.
That difference also compounds over time. A $500,000 stock portfolio that grows at 8% annually will more than double in less than 10 years, without a single dollar being added.
The Percentage Doesn't Tell the Whole Story
If your wealth grew 5% over the last year, it doesn’t mean that your money is slipping away from you. Any number of variables, from home prices to changes in income, spending or saving can all affect net worth over the short term.
The long-term trend matters more than short-term setbacks when it comes to building real wealth. If you’re consistently falling behind the averages when it comes to growing your net worth, you can use different strategies. Money that compounds over time in the stock market, for example, tends to outperform savings stashed away in bank accounts.
Knowing where others stand and how they are doing can be a good signpost as to whether your financial strategies are working. Understanding the current inflation rate can also help provide a clearer picture as to whether or not you are gaining ground from a purchasing-power standpoint.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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