The number of U.S. households with a net worth of US$1 million or more, excluding their primary residence, increased 21% last year to 7.5 million, according to a new report from Spectrem Group.

Those with $5 million in net worth, also excluding primary residence, increased 38% in 2004 to a record 740,000, a net increase of 200,000, Spectrem also noted. In terms of the overall affluent market, which comprises households with a net worth of $500,000 or more, the firm reported 25% growth in 2004 bringing the total to 13.1 million, from 10.5 million the year before.

“It has always been considered a significant achievement to enter the millionaire ranks, and last year 1.3 million net new households joined this exclusive club. The number of U.S. millionaires reached an all-time high of 7.5 million with this sizable increase, including 740,000 who surpass the US$5 million threshold. It is clear that 2004 was a very good year for millionaires, who finally broke the record of 7.1 million set in 1999,” said Catherine McBreen, managing director of Spectrem Group.

On average, affluent households hold the biggest percentage of their assets in investments (46%), which include stocks and bonds, managed accounts, IRAs, mutual funds, deposits and alternative investments.

Privately held businesses account for 21% of household assets, followed by the principal residence (10%), pension and defined contribution plans (10%), other real estate (7%) and insurance and annuities (6%). The margin of error is plus or minus 4.5 percentage points.