Household net worth changes over the years, and with it the distribution of assets that make up household net worth. From year-to-year long-term trend changes in household asset allocation can be difficult to see, but over longer periods of time these changes become easier to visualize with the naked eye.
The following chart (Chart 1) provides a visualization of changes in Canadian household asset composition over the last 30 years. It provides a breakdown of assets as a percent of total assets held by the Canadian household sector in discrete 5-year increments beginning with 1990. For a full-sized version of the chart, click on the image below.
The following chart (Chart 2) provides a different view of Canadian household wealth distribution, breaking things down this time by net worth quintiles instead of by year. Note that assets are categorized differently than the previous chart since it is based on Stats Canada survey data, whereas Chart 1 is based on the Stats Canada National Balance Sheet Accounts. The following chart is from the Stats Canada Survey of Financial Security for 2019, released at the end of 2020. For a full-sized version of the chart, click on the image below.
Notes on Chart 1
- Employer Pensions include both public sector pensions and private sector pensions. It does not include CPP, QPP, or OAS.
- Vehicles and Durable Goods consist of consumer goods with long periods between successive purchases. Such goods include items like cars, boats, trailers, furniture, appliances, and technology.
- Stocks and Non-Public Equity consist of publicly listed shares and non-listed shares. It does not include ETFs. ETFs are categorized as Mutual Funds by Statistics Canada.
- Foreign owned stocks and bonds/bills are consolidated into the total figure for the corresponding asset.
- Term deposits are estimates only. See below for further information.
- Other assets include non-residential buildings, intellectual property, inventory and machinery, loan assets, and accounts receivable. Note that the household sector also consists of non-incorporated businesses that are run by households, which often intermingle finances.
The data used is primarily drawn from the National Balance Sheet Accounts published by Statistics Canada. While this data provides a comprehensive time series dating back to 1990, in many cases the data suffers from a lack of decomposition. In order to provide more specific breakdowns of the various assets held by the Canadian household sector, the data was further supplemented as follows.
- Employer Pensions and Life Insurance – The National Balance Sheet Accounts groups pensions and life insurance as a single asset. Because pension assets reported in this figure are “Trusteed” pensions, we are able to use the Pension Satellite Account data provided by Stats Canada to break out employer pensions and life insurance into separate assets. Because the Pension Satellite Account reports the specific value of “Trusteed” pensions, by subtracting this value from the National Balance Sheet Accounts data, we are left with life insurance only.
- Currency, Deposits, and Term Deposits – The National Balance Sheet Accounts groups currency, deposits, and term deposits as a single asset. Because term deposits are generally regarded as fixed income, it is desirable to break off term deposits into its own asset class. To do this, we rely on the monetary aggregate statistics provided by the Bank of Canada, which records personal term deposits as a separate figure independent of personal savings and chequing deposits. To arrive at the value of term deposits in the chart above, we begin by summing all currency in circulation with all personal non-term deposits and all personal term deposits. The proportion of term deposits to total deposits is then used to determine the proportion of term deposits constituting the National Balance Sheet Accounts figure. We recognize that this is just an estimate, since “personal” deposits and “household” deposits are not equal (households can include small businesses that are run by households). However, for the purpose of the chart above, this approximation is deemed to be sufficient.