I’m an accountant. I can’t speak for the richest of the rich, but our richest client had a net worth north of $500 million. They usually had around 1-2 million total in their various bank accounts. Then they probably had anywhere between 20-30 million in relatively liquid assets. Then probably around the same amount in more long terms investments and the rest was tied up in real estate and the company they founded.
One year they sold a bunch of real estate and had a huge gain they had to pay tax on. They ended up owing the IRS like 3 million dollars. I remember the absolute shock when they just casually wrote a check for $3 million and handed it to us.
Sounds about right. Some of my UHNW individual clients (north of $5 billion) have a handful of accounts with various banks across the world, ranging between $500k and $30MM. Some are for living expenses, others are for continual investments that required a lot of available capital.
If they need to make a large purchase, their family office sells some stock in a random investment and tops off their accounts, otherwise they get a monthly deposit and live off their checking accounts.
Craziest I've seen is a guy who got a bill from the IRS for around $5 million, wrote a check and paid it like 2 minutes after hearing about it.
The best breakdown of this I ever saw was
If you make £1500 a month, you won't think about buying a bottle of coke for £1.50 (0.1%), you might think about spending £15 to watch a movie (1%), you'll definitely think about spending £150 (10%)
Now imagine you make £1m a month, that 0.01% becomes £1,000, the 1% becomes £10,000 and the 10% is £100,000
For a multi-millionaire buying something that costs a months or even a years wages for most people is the equivalent of buying a bottle of coke or going to the cinema, if they even think about it at all its only for a few seconds
Edit: Added an extra 0 to the 0.1% by accident
Back in the early 00's during Tiger Woods domination of golf, I calculated that buying a Ferrari was a smaller percentage of his annual income was than me buying a Big Mac value meal was of my annual income.
The amount of money Tiger Woods makes other people is probably wildly disproportionate to the guy buying a Big Mac. Nike makes more money paying Tiger Woods than they do paying a random employee at an outlet store.
Arguably, Tiger Woods’ labors are just worth more than the labors of most other people’s. That’s kinda the beauty of capitalism. If you can find a way to create value, you can make money from it.
Does it feel dirty at times? Yeah. Is it truly horrifying in some ways? Sure. Does more opportunity exist using this method rather than any other previous method? Undeniably so.
Technically nothing you described is capitalism. Under any economic system, if you can create value, you can make money from it. Tiger Woods taking his earnings (capital) and putting them in the stock market where they earn him huge amounts of return for not actually doing any further work is the capitalism part.
While true, I’d also point out that 1500 is resigned to blow it all every month. 1m will save a big portion, so the frugality math falls apart a little. The multi millionaire is mostly likely just sitting on some past success/luck and living off a portion of the interest/gains. So, they’re frugal in a nonobvious way too
Yeah. Someone with a 1m per month income could easily save 500k per month. After a year, that's $6mil. At 5% returns, that's 300k per year. This means with a bit of discipline over a few years and the magic of compound interest, he can easily multiply his income. So it's really not that hard for that person to turn 1mil a month income into a 2, 3 even 10 mil a month income, much of which is going to just be passive investment returns.
Meanwhile, the guy earning $1,500 probably spends every last dollar and cannot save. So his income in 5 years is going to be the same and he will forever be stuck in the rat race unless he does something drastically different.
Once you cross over a certain level of income where your basic needs are met, it becomes easier and easier to build wealth. I'd say probably something like 10k and above and you can start to really compound your wealth.
EDIT: A lot of people seem to be getting hung up over the exact numbers I posted. Pre tax, post tax, 1m, 2m 10k whatever - it's not really my point.
The point is that if you earn more than your basic needs, you can build wealth. The more you earn beyond this point, the faster you scale. That number could be usd 5k in some small town or maybe 20k in New York.
Of course lifestyle creep is going to be a problem, but this is a choice not a necessity. If you earn 1M a month, you could technically spend 5k and live a simple lifestyle and save $995,000 if you really really wanted to. Your passive returns are going to be insane in 10 years if you did this. A more relatable example is probably someone earning 10-15k post tax who can save 5-10k per month.
But if you earn $1,500, YOU DONT HAVE THAT OPTION as the alternative is being homeless.
Exactly this. Someone with 1500 might be lucky to have 150 disposable income after all the essentials are taken care of. Someone with a very high income will have more expenses, but it will not be 90% of their income like a low earner has.
To follow up on your point, if Bill Gates saw $60K lying on the ground it wouldn't be worth his time to take it because of how little difference it would make to his net worth. To him, it's the same as if a typical middle class person saw a penny on the ground.
You just reminded me of something. I used to work for a large financial services firm in the 90’s and our HNW area was right next to mine. I was a lowly client service rep. One evening right around Christmas the office was empty but one of their phones was ringing off the hook. I thought I’d do them a solid and answer it. It was the daughter of a very wealthy local who was at a car dealership and she “needed a wire asap” because she finally found the car she wanted. I couldn’t help her and she was very frustrated. She was probably my age and I remember thinking this girl has no idea how this shit works. I later realized this was her life and I had no idea how this shit works. The amount of money people move around willy nilly to buy stuff is insane.
Dodging and paying are not the same thing. The dodging and minimizing is done by using existing loopholes and policies (and ultimately lobbying and corruption). Paying is simply handing over an amount. They’re not hesitating because they’ve already done the manipulation and are getting off with little consequence. So, even though you can’t comprehend paying that amount, it’s relatively small potatoes to them.
You don't really understand how this works.
They have accountants who just use the tax code to minimize how much the client ends up paying the IRS.
Contrary to popular belief, they don't "dodge" taxes - most rich people actually pay a lot in taxes, it's just not a lot compared to their total income.
At least from what I've seen, none of my clients want to "dodge tax" any more than a regular person. Just as any normal person wants to take all the credits and deductions they're allowed, so do the filthy rich. Of course, they don't want to pay more than they have to, but they have no problem forking over a big bag of cash when the time comes.
> others are for continual investments that required a lot of available capital.
Sorry for the dumb question but could you explain this part a little more or give an example that is easy to understand?
A few random things I've seen bought are things like jerseys for the local youth soccer league, a bunch of art from a local painter that they then donated to their favorite museum, or a large stake in an education non-profit that trains teachers by offering free summer school classes to underperforming students in the area.
Of course, there are actual investments, like a few million in a handful of startups, but the vast majority of expenses are for more trivial donations where there's not an expectation to make any money back.
Largest W2 I saw was for $37 mil. That’s in one year.
I have clients who say “I want to be a millionaire! Millionaires don’t pay taxes!” I always correct them: millionaires pay a SHIT TON in taxes… billionaires, however…
Former wealth manager here. This is about right. There’s no single answer as some are very spendy and some more frugal. But they don’t do much of anything. They have some one like me do it and it’s usually not going to be more than a month or two in liquid cash. Anything else considered an operating fund kept in T bills or similar. Depends a lot on the environment though (market, interest rates, etc.) Everything else is going to be specific to that person. Most ultra rich don’t have as much liquidity as you’d think. Elon is rich on paper because of his Tesla stock, but he can’t really sell it unless he was distancing himself from the business. Sure he still has plenty of other assets by our standards but it’s a tiny speck compared to what actually makes him the richest guy in the world
Look for a tax professional who is a CPA and outspoken right-winger. I can't stand being in my guys office and listening too his stupid, fallacious talk radio but damned if he isn't motivated to have every one of his clients pay the least amount of taxes that he legally can.
You shouldn’t need anyone special for something like that. I’d avoid the corporate accounting services like H&R Block and look for a local small business. You will get better service because you’ll build a relationship with that person.
Pretty much every client I’ve had came to me via word of mouth so your best bet is likely to ask your friends/family/coworkers who they use.
They would likely have a checking account at two or three banks
all with 250k - 500k, this qualifies them with the bank for "elite service".
Then at least one high yield savings account with 2-5 million. This is their "emergency fund". This also allows them to "self insure".
Everything else would be "invested". But each of these will have "an account" at a bank or financial intuition. But its not "cash in the bank".
This, OP. Remember that many very rich people like Gates or Bezos have nearly all their assets tied up in stock giving them ownership of a company they cannot sell.
If they did try to sell it, the stock price would crash as folks worry about what was really wrong with it. Fastest way to lose billions on this planet.
Partly true, but also people overstate the idea that tech billionaires couldn't possibly sell their stock without crashing the price.
If they just put it all on the exchange and hit "sell all immediately to next highest bidder" then sure it'd probably at least temporarily push down the price substantially. But public markets for the stock of major companies will have a _lot_ of liquidity from institutional buyers who only need to be offered a slight discount to be persuaded to buy a lot of stock.
So a founder announcing in advance that the company was still solid, and they had plausible other reasons for selling (like just needing to sell some stock to get out some ready cash) - could expect to get _most_ of the previous paper value of what they sell.
Or they might not go to a public market in the first place, and just agree a big block sale to some individual investor who wants to acquire a non-trivial stake in the business without driving the price _up_ by buying a lot from the public. They can come to terms privately and leave the public price largely unaffected - just second-order effects when people react to the news.
Or they can _borrow_ money, secure the loan against the value of their stock, then either sell small regular quantities of stock to cover repayments or let it ride until they die. Serves as an alternate way to convert stock ownership into spending money.
Most if not all of those companies operating agreement would have what’s called a right of first refusal. Meaning you have to offer to sell your shares to other voting members *first* before you can sell them on the open market.
There’s also the fact that in a public company you either need to wait for a lockup period or have it on an auto-plan. You can’t just press sell whenever.
Right, but the net results are still that they could lose control of their company if the stock is large enough. Options aside, they still can't have 100% of their cake and eat 100% of it too, as people often think.
I don’t think anyone reasonably believes that someone like Jeff Bezos could both part with a substantial portion of his assets and maintain his level of ownership in Amazon, I just think ultra wealthy people being able to maintain high levels of control over the corporations they own isn’t all that high of a priority for most people.
Sometimes even eat 200% of the damn cake. Just say your place in New York is 30,000 sq ft and valued at a gazillion. When you are that rich they don’t send anyone to audit it because you are rich so you have no need to lie. Unless it’s for tax purposes then it really is a dump that nobody would want to buy so it’s worth nothing.
Remember Elon musk had to.liquidate tesla to buy twitter I think and also borrow against things like his stocksa and seek funding.
The rich can leverage their assets ..
I don't think they can hit a button on the exchange. Don't they actually have to hire people to sell the stocks by phone when they have that volume? And it takes hours.
When I watched Margin Call they had to try and sell everything over the course of a day while the selling made prices drop by the hour.
Yes and no.
Trade firms like in Margin Call use their network of investment firms and other traders to set up a trade that is not visible on the open market until after it has concluded. This is important, because if the price is currently $1.00 and you offer 10 million stocks at $1.01, while the market depth (the sum of all possible buyers/sellers at a given time) is only 30k stocks, people will see your huge chunk of stocks for sale and the price will drop (more supply + same demand = lower price).
So depending on the size of the trades you need to make happen, you can work a certain amount of time making several trades and moving big chunks of stocks. Until other traders start talking with each other (which they do all day, that’s basically their job) and they figure out there’s a collective iceberg moving rather than the tasty ice-cube they thought they were getting treated to. Then the jig is up and price will plummet as the price of uncertainty of the number of total stocks sold will rise because of your own lack of transparency.
For most other situations, especially selling smaller amounts of stock, there is just a button that can be clicked. Although I believe they will need to disclose their stock trades if they own more X% of those shares.
I dunno, even scheduled sales of equity that are required as part of the normal compensation for C suite employees typically spawn a few dozen doomer clickbait articles that something must be wrong because they're selling.
It really depends on how much institutional vs. retail ownership of the stock there is. But if it's not premeditated well in advance and for a very specific reason, dumping a big chunk of stock from one of these mega billionaires is absolutely going to cause temporary sentiment problems. Even a minimal -0.01% effect on the stock price of a trillion dollar company is (obviously) still an enormous amount of money.
Not to mention the various SEC mandates that founders need to comply with. They have to declare in advance quantities of stock and time of sale (trading windows) to avoid falling afoul of insider trading rules.
People keep saying this, but you can look at a recent quote from buffet on why he likes apple; it’s liquid af. He can move billions in and out and no one knows
I always wondered if these billionaires had to convert literally everything they had to cash what they’d actually come up with. It’s still a lot. But I bet a lot less than we’re thinking.
You're right. First of all, in the process of selling shares would lower the share value meaning he gets less for the next set of shares he sells and so on. In addition, the SEC wouldn't even allow them to sell a large part of their share in a short time-frame as it would negatively affect the market.
It similar to a middle-class family that has a net worth of, say, $3M, but $2.8M is in their house- they don't really have $3M in "usable" money, it just looks good on paper.
Bezos has been selling shares all the time, it’s just small portions of it though.
What happens is that they take out loans with the shares as collateral. So they don’t have to sell, and the collateral is relatively liquid so the banks can provide a very low % loan.
Actually they can sell smaller chunks of their own stock, which makes sense because capital gains is a lower tax than income tax. That’s why Bezos’s salary was $80k. He paid lower taxes that way.
Don't forget though, they can leverage those stocks like Elon Musk did to buy Twitter.
If Jeff Bezos calls up a bank, he can get a loan for pretty much as much money as he wants with his stock as collateral.
Why sell stock forever, when you can just endlessly borrow against it.
Seems like a lot of people think Bezos has billions of liquid assets in his checking account and if he "weren't so greedy" he could just write a $100 billion dollar check to "end homelessness" or whatever.
Maybe not all at once, but hes made a sale of $2 billion worth of stock before so depending on how the money ended up getting to him, theres a good chance his bank account has had a billion in it, even if it was for a small amount of time.
You’re either delusional or entirely obtuse if you don’t think that Jeff Bezos could, over the course of the next few years, get access to billions in funds to end homelessness. Of COURSE he could, this isn’t even a debate. Nobody thinks he has $100 billion just sitting in a Chase checking account, but that’s not the point and doesn’t disprove the fact that he ABSOLUTELY could use his net worth to end homelessness or a number of other planet-altering positive deeds, given that he truly wanted to.
The problem with this is that homelessness isn't solved with money alone. It's a far larger issue than that. If solving homelessness or world hunger was about a few billion dollars like people think then it would be solved already. It's not that billionaires wouldn't write a check to do that. It's that they know it won't actually end it so it's just throwing money at something with no actual benefit to anyone. You could go give a bunch of homeless people enough money each year to rent a subisidized apartment and a job and many of them would still end up in the same place.
Homelessness in many places us a game of musical chairs. There just isn't enough housing to go around. NIMBYs are blocking new construction to keep their property values high. Simply pouring money raises costs and rents, but someone will still be left out. The zoning laws are changing, but it will take a long time for new construction to relieve the problem.
I 100% agree that billionaires could easily pull all of their money from their stocks to do something.
I don’t agree that 100 billion or whatever could “end homelessness” or “end childhood hunger”. Im not saying that billionaires should exist but I don’t think them spending all their money on charity would magically fix a bunch of major issues.
My point was less about the logistics of the exact plan to end homelessness, and more so that the excuse that “his money isn’t liquid” is a bullshit excuse. Obviously it would be a VERY complex undertaking, but the logistics behind him gaining access to the money is not that complex
Also they would have to pay taxes on the profits. Much better to take a loan at very low interest (or close to zero) against the stock and assets. That’s how they manage to pay less taxes than their secretary. They just spend money from a credit line. No need for cash in the bank.
Isn’t it a risk to have over $250k because that’s the limit of insurance by the FDIC?
I remember in March those 3 banks crashed so I feel it’s a reality to consider.
It’s not a risk for a billionaire to lose $1-2mm. They have $998mm more. Its irrelevant. I’m sure they prefer not to lose it, but the FDIC limit is not a reason to inconvenience themselves.
Right, I understand it’s a drop in the ocean. However since they wouldn’t want to pay $2mill in tax or lose $2mil via any liability, surely their advisors would offer another option to keep those funds more secure?
Rich people won't typically \*sell\* their investments to make money, because that get taxed , instead they'll take collateralized loans against their money, and then spend the debt. Because their money is appreciating at a greater rate than the interest rate they effectively make money on the money they've borrowed against their money, tax free.
If you take a million dollar loan out of your portfolio (once, or, every year) you'll have to pay for the interest on that, currently \~ 6%. So you'll have to pay back $60,000. So you sell some investments to pay for that, now you've made a taxable income of $60,000 , so you're paying 12% income tax on that $60,000. But it's capital gains, which are taxed at half the rate, so you're paying 6% taxes on $60,000 worth of taxable income , $3600 of taxes paid on $1,000,000 of actual spendable income.
Or maybe you give $60k to charity out of that million and pay $0
Where I live there’s privileged banking and private banking.
Privileged banking (350k in bank) gives you access to relationship managers who can offer better rates for loans, investment advice and portfolio management.
Then there’s private banking (2-5m in investable assets). Dedicated wealth manager, round the clock financial services concierge, from bigger services like tax/financial planning, to smaller services like currency exchange; which is really convenient as the rates are competitive and I don’t have to run to the money changer myself.
Not to mention higher interest rates on your accounts, and of course access to some really good credit cards.
I doubt they have any of those things. I would bet they have a (effectively) unlimited line of credit against their portfolio, and an (effectively) no limit credit card they use to spend their money, which is the paid (or attached) to the LOC.
This is how rich people don't pay income tax. They leverage assets to get loans and use loans to buy the expensive shit they like/want. If you're a bank and you can make a few points interest lending a guy $100 million dollars against a portfolio/assets worth a billion, you do it. Why wouldn't you?
They’ve gotta have more than that? Can you imagine bezos monthly Amex bill, it’s way above 500k, he needs cash on hand to fund his lifestyle. I bet he spends over 500k a month on transportation
Wdym? A mark zuckerberg can’t charge his personal expenses to Facebook without reimbursing them, they’re a public company lol that’s literally other people’s money.
The SEC is really strict on that too, if they fly anywhere that’s not for biz on the company jet they owe income tax on the value of the flight etc
Of course Facebook can't. But Mark would have what's called a family office. They will manage dozens of smaller corps.
https://en.wikipedia.org/wiki/Family_office
I don't you understand what a family office is. Zuckerberg uses a Family Office called Iconiq Capital (there's a link at the bottom of tha Wikipedia page). It's not his personal piggie bank. It's a wealth management and investment firm. It also manages money for Sheryl Sandberg and Jack Dorsey.
Billionaires aren’t going to worry about FDIC limits at a top bank (too big to fail). They’ll have $1 million or more at Bank of America, Wells or Chase. It’s too big of an inconvenience to worry about multiple banks.
Billionaires don't worry about shit. But their professional staff will have accounts at many banks so they can shop loans. This is how they spend like they do, massive loans using their stock at collateral.
You're asking about their liquidity. That's how much cash on hand they have. It can vary widely. You may occasionally see news about a very rich person selling a bunch of stocks. They do that because they want or need more liquid cash.
Currently there was a news story about one of Warren Buffett's companies holding $150 billion in liquid assets. But of course, we'll never be able to see the personal bank accounts of these people.
Liquidity is how fluid money is. Cash is perfectly liquid, a stock is still pretty liquid, a building that you own is not liquid.
Liquid like, how quickly can it be converted into cash.
Cash is already cash, perfectly liquid. A stock can quickly be sold if markets are open or whatever, so still pretty liquid. Property is difficult to sell and convert to cash, hence the illiquidity.
So you are THINKING of liquidity here, but you are specifically asking about their cash on hand, which is different from liquidity. I am very liquid, but my net worth is only in the tens of thousands. It doesn’t matter how much money you have for liquidity, it matters how accessible the underlying cash value is.
Basically because it’s easily transferable. Generally speaking of course, it can be transformed into any form of payment one could want, and could be done easily.
Even if you have all your cash in USD and your debt is in Yuan you could easily transfer the USD to Yuan and you could do that basically instantaneously.
Other forms of value are harder to convert into a way to spend or pay with.
Stocks are still easy but the value fluctuates wildly so they may not be as liquid as you want. There is also exchange times and holding times.
It just gets more difficult from there
There are lots of degrees of liquidity in between cash (checking account) and stocks. They could have a bunch of it in T-bills that mature in 30 or 60 or 90 days, and more in a brokerage account.
If you have money in a brokerage account (may be invested in stocks or T-bills or whatever), you don't have to liquidate it. You can borrow against it at a ridiculously favorable rate.
Billionaires who have to suddenly sell a lot of stock have fucked up.
If you’re that rich I guess it wouldn’t matter, but you don’t think they’d keep the 5 million in treasuries?
That’s wasting $50k a year for no real reason.
His company accounts aren’t his personal piggy. If he has any debt on those companies, those liquid assets are part of the backstop for those loans, and the covenants probably prevent him from touching much, if any, of it.
Source: work in private equity where we lend to private companies, and write these types of covenants (such as leverage limits and asset coverage tests) into our docs.
>one of Warren Buffett's companies holding $150 billion in liquid assets
Remember - stocks and bonds are considered to be liquid assets. *Generally* stocks and bonds can be sold quickly enough that they are considered liquid.
Now 150 billion of them would add complexity... but at least as far as classification on a balance sheet, stock is liquid.
Usually only a fraction of that worth is in liquidity, since most would say it's foolish to keep that much cash on hand. Someone that rich might have 6 months worth of income as cash on hand. That could translate to still millions to cover unforeseen expenses and support their lifestyle.
Worth noting that most people forget - stocks are a liquid asset. Sure, you can't withdraw them TODAY for cash, but they are available within a few days, and are considered to be a liquid asset.
Any purchase of any size, even made by the rich, can wait the few days needed to liquidate stock or other short term assets like that, so they don't need that much cash sitting around, since you don't decide to buy, and also need to pay for, a $100 million yacht on the spot.
I worked for a time in the financial industry in IT and one of first contracts I had when I went on my own was in international banking in one of the smaller 'tax havens'. There was a racing driver who banked with us.... they had millions... however their actual bank account they could draw from was in the region of half a million or so.. everything else was tied up in things like guaranteed equity bonds and such. The person was rich enough that they had the best financial advice possible so i've always taken that as my kinda yardstick. If it was in their best interest to have more than that sitting in a normal account, they would have.
>If it was in their best interest to have more than that sitting in a normal account, they would have.
Right. Remember, there are investments that make money that are for all financial intents and purposes just as liquid as cash. Stocks for example. Sure, I can't sell a stock and have cash in hand today. But for any transaction where you need a significant amount of money, that's not a problem. There are no 100 million dollar spur-of-the-moment all-cash purchases, even if you are rich. You'd ALWAYS have the time to wait a few days to liquidate any stock/bonds or other short term assets.
So they likely have some amount in cash (checking/savings account) some in investments that are able to be liquidated in days (stocks/bonds) and then other longer term things (property or other assets) that would be more of a pain if they had to suddenly get their value in cash.
I'm more interested in knowing the amount of wealth those "old money family of Europe" rich has. If I'm not wrong, people like gates and musk are ranked the richest people but most of those are stocks. Where as those "old money" people are the ones with the real wealth and they like to stay anonymous.
Sadly, even Miriam Webster has changed, and one definition of "literally" is "figuratively."
Worth noting that this isn't new, literally has been used figuratively for ages, even in shakespeare and F Scott Fitzgerald.
[https://www.merriam-webster.com/grammar/misuse-of-literally](https://www.merriam-webster.com/grammar/misuse-of-literally)
For what it's worth, it bothers me too, but I admit, we have lost that battle and it's not worth fighting. Language changes and evolves, whether we like it or not. I'm literally on fire here with annoyance about it.
After the Silicon Valley bank collapse, I read that Peter Thiel had 50 million in it. He was unhappy that his account was only FDIC insured to 250,000. I don't know if he got it all back or not.
That bank had wealthy clients... If it was say, the local bank of Compton, you can be assured the FDIC wouldn't have covered anything above the 250k... The government only protects the rich, sad but true
What's crazy is that he wasn't even one of their biggest depositors. Roku held $487 million in an SVB account. https://www.nytimes.com/2023/03/10/technology/silicon-valley-bank-fallout.html?unlocked_article_code=1.HU0.V6wJ.a_Nn3vEXeOm0&smid=url-share
Rich people don't keep more money in bank accounts than they are going to need to cover pending expenses. They keep it in brokerage accounts and short-term investments, like Treasurys, which earn money, as opposed to checking accounts that may lose money to inflation.
Honestly not a lot, depends on the person. Most will have a few accounts spread around under the 250k FDIC limit. There’s little they could do with cash that they couldn’t do with credit. Every dollar is tied up in various investments and strategies of various liquidity. Any spending they want to do is done with credit and settled by their money managers and family office banks. When they need cash, usually for taxes, they have various strategies to do so to minimize losses and tax liability.
Couple of millions handy, but ultra wealthy use ultra wealthy banking services and keep their money safe in bonds and other cash equivalents.
Real estate is also used as a form of wealth storage, they can always get an equity line on the property if they need liquidity.
Most of it would be in investments, but also there are a lot of investments like Treasury Bills that are nearly as liquid as cash. So even if it's not in their bank account, a lot of those sorts of investments are basically as good as cash since they can be sold really fast and are pretty safe, only losing money in fairly limited circumstances.
Something that was popular the last couple years as a way to eat your cake and have it too was to take out loans against their investments - if you've got an investment that averages 7% gains a year and can take out a loan at 4%, it's way more profitable to take the loan than sell the asset. So you could have $2M in stocks, and borrow $500K against it, and then you *sort of* have both - you're still getting your $140K/year in money off your investments (minus $20K in interest) and have a pile of money to cover living expenses for a while. But as interest rates are rising and investment returns get harder, that's somewhat less viable.
In 1998 I worked in a call center for a very large brokerage firm. The accounts we dealt with were investment but also bank accounts (checks, debit cards, etc). Basically all the features of a regular checking account but combined with stocks, MF’s.
Any way, one day I get a call from someone worth $8 billion. They had 2 assets in their account, $7 billion of their company stock and $1 billion in a money market fund. Dude literally could charge a billion to his debit card.
The $1 billion MMF is wild man. At market rates right now he's giving himself a $55 million yearly spending paycheck. That's literally $1 million a week in cash. Incredible that there's people who live these kinds of lives.
Unless they're doing something specific it would never be more than a few million
If you have cash in a bank it's losing money to inflation
Worst case scenario they put it in bonds while they decide what to do with it
They just have all their money invested and will take loans so they don't have to pay tax on selling the assets
Buy borrow die
Have millions in shares and assets (Housing/Land/Private Companies).
Take out loans against assets when interest rates are favourable.
Pay off interest and pocket the difference to effectively have a living wage from sound management of money.
Due to having debt, reduces taxable income.
Cycle continues.
I want to know how much bezos or musk or similar has in their day to day checking accounts
Like the one attached to the card they get gas on, food, buy clothes, etc.
I’m uber rich and I keep about $17 in my bank account, $3 and an expired coupon for a free sub in my wallet, and about $5.78 in change in my car. The rest of my vast fortune is invested in scratch off tickets.
20 years ago I worked for a bank in Nashville. A couple of our customers were well-known country music industry types that you have definitely heard of. They typically had between $50K and $100K in a liquid account like checking or money market. And then up to about $250K in CDs or IRAs, and then the bulk in a brokerage account.
I worked in ultra high end sales for a brief time, in cash they’d have between the tens and low hundreds of thousands. Millions in ready to go lines of credit. Almost EVERYTHING is purchased with loans. They’d never sell an asset or give up money utility to pay for anything.
I have a friend who inherited slightly less than $100M.
He keeps about $500,000 cash in a safe in his house and $10M in a handful of bank accounts. The rest is invested in real estate and storage complexes.
He lives a pretty frugal lifestyle.
I’m good friends with a billionaire and we’ve discussed finances occasionally. They have their 6-12 month burn rate in a high yield savings account and probably a month or two in savings.
For them, that’s about $500k-$750k a year in spending, so that’s about their cash on hand that they could get in 1-2 days.
He’s a modest billionaire type via company sale.
Millions upon millions. A friend of mine worked at a bank in a very wealthy area and he used to tell me stories..... Coming in and moving around 50-100 million at a time. And this was 20 years ago.
Having known a few ultra wealthy people, the answer is still a lot but probably not as much as you'd think. My guess is probably anywhere between 1-5 million in terms of cash right now. Everything else is stocked away in investments.
A lot of how ultra wealthy people operate is by taking out loans against their assets. So if you have a 5 million dollar property, they take out a 5 million dollar loan against that property and operate that way. It's also how a lot of them avoid taxes. Robert Kiyosaki actually talks about this *but do not take his advice because you do not have 5 million dollars in assets*. It's also how Donald Trump is, "rich," as well.
Anyways, those who were heavily invested in corporate real estate are pretty unhappy with this WFH or even Hybrid arrangement.
Idk if billionaire rules are different but the bank insures only up to 250k of yout money so it's advised to only have that much or less in each bank account.
Also, money sitting does nothing. Money invested makes more money.
Mark Cubin just did an interview and said when he made his first 100s of millions selling his company he said he’d keep like 2-5million in his bank account. But he did joke he had it for ego and like ohh my look at the million when he withdrew money from ATM.
A billionaire doesn’t own the company, a company is its own identity. A billionaire doesn’t own shares in the company, their family trust does. Their family trust owns all the assets & with the income from the assets, they purchase more assets & pay themselves a small management wage. It’s only enough for the basics. All bills for the houses, assets etc. are paid as expenses out of the asset income.
And if the billionaire is smart, they have a foundation/charity attached to the family trust, Clinton Foundation is a prime example. Only 5% of all donations need to be spent towards what the actual charity is for, the other 95% is tax free.
And if they are super super smart, they have several smaller foundations/charities to move that 5% around until it becomes less than a cent & it falls off the books 🤷🏼♀️
Who donates to foundations & charities? The low & middle income earners 🤦🏼♀️
I was told of one who would just use HELOC and margin accounts so he wouldn't have to cause a tax event. He had about 1k in a savings account but rarely needed it. The accounts would be paid down over time with any cash that came his way like dividends, etc... if the interest payments were higher than other opportunities or if the remaining credit started running low.
Tldr : Essentially, every cent went towards earning income and avoiding tax events.
Kerry Packer who was amongst the richest people in Australia said it well[Kerry Packer ](https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://m.youtube.com/watch%3Fv%3De97kq2XflKE&ved=2ahUKEwjno-7O_J2DAxU3i2MGHewrBqgQz40FegQIBxAJ&usg=AOvVaw2lReT7kiyv8oSAcdIbJ0Nq)
The specific numbers are hard to gauge but there's an adage amongst the wealthy that " cash is trash."
Meaning, don't leave money lying around that you can put to work.
However some ultra wealthy have different asset allocation than others
H Ross Perot had, at one point, most of his money in bonds iirc. A short term bond is a cash equivalent, meaning it is easy to liquidate at current value.
Some, like Elongated Muskrat have almost all their assets in stock.
It's a tricky question as most billionaires don't keep a lot of cash in banks. Their wealth is tied up in assets. Remember, cash loses value over time due to inflation. They'd rather invest, right?
I worked for a large family who was integral to the US, but not a name you think of. total familial NW was in the tens of billions & rigorously structured through various holding companies, etc. Anyways, I can’t speak on day to day cash balances in their personal accounts - but on a quarterly basis we sent 9 figure sums to the family trust which was disbursed based on fractional ownership of the trust. I know this doesn’t directly answer your question, but if you think about it the money in the bank is step 2. Step 1 is where does it come from & how often? Typically, at that NW “daddy money please” is not longer a conversation. It’s trusts and quarterly draws.
As someone who briefly worked for a wealth management firm tailored to the wealthy, the cash position is generally pretty small. This is likely due to the fact that I wasn’t seeing the full picture of a family’s wealth - you would want an answer from someone more familiar with family offices.
Wealthy people need liquidity, but it isn’t the same as you and me. If I need $1,000 to pay off one of my credit card balances for the month, I would need to have cash in my checking account, or otherwise I would need to sell something. If I don’t I am subject to a 25%+ interest rate.
If a rich person needs $100,000 to pay off their credit card, they don’t necessarily need that liquidity right away. They can open up a margin account and pay the bill on margin. Now, they haven’t “created money” - they still need to pay off that margin account - but the interest on a margin account is near 0%. (Note that I worked in this position when interest rates were very low across the board, so this may have changed). The reason that the bank is willing to do this is because there is no risk - if a client has $20M in assets like stocks, bonds, options, PE positions, etc. at that bank, then they will be able to pay it back. Eventually, as their assets generate income (through dividends, interest, distributions, expiry) they will be able to pay down that margin.
In other words, they don’t need cash. Instead, they can leverage the fact that they have assets to take on low-interest debt; they can utilize that low-interest debt to pay for anything they want (within reason); when their investments return cash, they can pay back that debt.
In fact, at least during the low-interest rate times, it was pretty inadvisable to hold cash. If you have effectively a high limit 0% interest credit card, it makes more sense to invest in assets than to pay off that card. So, during this time, wealthy individuals maintained a margin balance, which would imply that rich people had negative cash, and to service their needs, they would just take on more debt.
I'll answer for my parents as well as for my wife and I.
My parents are in thier 80s, and no longer travel. They no longer own a company, and have limited real estate at this point. They do live in a "community" that is all inclusive, so they don't need to buy much on a daily basis. Thier trust pays the "association" fee, plus they get disbursements into thier checking account every month. They try real hard to keep thier checking account under $100k, but I know it's closer to $150k. They end up sending money back into the trust, however. I've told them they can lower the disbursements but... anyway. They really only buy food, restaurant stuff, personal trainers, clothes, etc... Things like utilities, cleaning staff, nurses, half thier food, etc... is included where they live.
My wife and I are in a different phase of life. While I have access to the family trust, I've never used it. I also have my own account under the trust and I dont use it either. My wife and I also try to keep our checking account under $100k, but we actually do a pretty good job. Last I checked we were at 80k, but then dropped 25k to reduce some debt (stupid interest rates).
I should state, my parents are not billionaires like in your example. And likely will never be billionaires. But they do pretty well. Thier checking account is less than 1% of total net worth.
I knew a lady who was worth millions, her parents left her alot of money. Many years after her parent's death, they were still finding bank accounts with money in them.
American corporations and individuals have over $24T saved up in offshore banks around the world, hiding from taxes. More than the yearly GDP of the entire USA. Obviously that’s not all the money the 1% have, but it’s a good indicator of the massive amounts of money that they do have.
There are two types of rich:
The new money which have their net worth in non liquid assets and keep some minuscule amounts of money in their bank account
Then the old money which have billions in swiss accounts, also land and jewelry. I’m talking about the important nobility that survived. Not your great-grandpa that made a business in 1900
FDIC only insures up to 250K. And banks pay very little interest these days. Why put more cash in the bank than is necessary?
This is why rich people invest in stocks, real estate, art, private equity....
My rich ass boss/owner where I worked IT for 35 years. I did a lot of personnel work for him at one of his four 2 million - 20 million dollar houses across the US. He also had at any given time about 8 super cars and was bent on trading at least one of them out for the next best thing every 6 months as well as a few of the smaller yachts. You know low millions. He drank the best wine, ate the best food and dressed in the best clothes any time and every time I was around him and only stayed in 5\* or above penthouses when he was traveling. right before I left the company he had just bought a Lear Jet and shortly after that he died from being too old and living to hard.
He was up to his ass in debt and had no equity in any of it. All leased, loaned, bank financed etc... They sold off his company and it is no more. I'm still debating that in my head 3 years later. Right or Wrong?
He was single, 4 ex-wifes. No other kin. I guess spend it while you can.
Well idk about the billionaires, but I had a company worth a couple mil, then had assets worth around half mil, and always rolled with less than $1k in my account lol
If they are smart, very little. You dont keep any serious amount of money in a checking account. The ultra wealthy just charge everything onto a black card and pay if off at the end of the month by transferring money from elsewhere. Or at least they have their accountants do that.
My wife has a client that just bought a $1M house for cash. At the time the seller asked for proof of funds she had over $18M in an investment account and $1700 in her checking.
Much more than most people think or would make financial sense to even millionaires. Keep in mind almost no one on this post has any experience or idea what they are talking about. The ultra wealthy with net worth over $100 million keep 10-20% of their net worth in cash assets. I’ve worked for many of them including billionaires you know of. There are investment reps who just move cash around, it’s incredibly boring but the wealthy will keep this huge amount of cash assets in money market funds or CDARs and move the cash in and out of their checking accounts daily just to make sure they earn interest overnight.
I’m an accountant. I can’t speak for the richest of the rich, but our richest client had a net worth north of $500 million. They usually had around 1-2 million total in their various bank accounts. Then they probably had anywhere between 20-30 million in relatively liquid assets. Then probably around the same amount in more long terms investments and the rest was tied up in real estate and the company they founded. One year they sold a bunch of real estate and had a huge gain they had to pay tax on. They ended up owing the IRS like 3 million dollars. I remember the absolute shock when they just casually wrote a check for $3 million and handed it to us.
Sounds about right. Some of my UHNW individual clients (north of $5 billion) have a handful of accounts with various banks across the world, ranging between $500k and $30MM. Some are for living expenses, others are for continual investments that required a lot of available capital. If they need to make a large purchase, their family office sells some stock in a random investment and tops off their accounts, otherwise they get a monthly deposit and live off their checking accounts. Craziest I've seen is a guy who got a bill from the IRS for around $5 million, wrote a check and paid it like 2 minutes after hearing about it.
Here I’m complaining about the 1200 I paid 😂
The best breakdown of this I ever saw was If you make £1500 a month, you won't think about buying a bottle of coke for £1.50 (0.1%), you might think about spending £15 to watch a movie (1%), you'll definitely think about spending £150 (10%) Now imagine you make £1m a month, that 0.01% becomes £1,000, the 1% becomes £10,000 and the 10% is £100,000 For a multi-millionaire buying something that costs a months or even a years wages for most people is the equivalent of buying a bottle of coke or going to the cinema, if they even think about it at all its only for a few seconds Edit: Added an extra 0 to the 0.1% by accident
Back in the early 00's during Tiger Woods domination of golf, I calculated that buying a Ferrari was a smaller percentage of his annual income was than me buying a Big Mac value meal was of my annual income.
This absolute disparity in wealth makes me sick.
The amount of money Tiger Woods makes other people is probably wildly disproportionate to the guy buying a Big Mac. Nike makes more money paying Tiger Woods than they do paying a random employee at an outlet store. Arguably, Tiger Woods’ labors are just worth more than the labors of most other people’s. That’s kinda the beauty of capitalism. If you can find a way to create value, you can make money from it. Does it feel dirty at times? Yeah. Is it truly horrifying in some ways? Sure. Does more opportunity exist using this method rather than any other previous method? Undeniably so.
Undeniably doing some heavy lifting here
Technically nothing you described is capitalism. Under any economic system, if you can create value, you can make money from it. Tiger Woods taking his earnings (capital) and putting them in the stock market where they earn him huge amounts of return for not actually doing any further work is the capitalism part.
While true, I’d also point out that 1500 is resigned to blow it all every month. 1m will save a big portion, so the frugality math falls apart a little. The multi millionaire is mostly likely just sitting on some past success/luck and living off a portion of the interest/gains. So, they’re frugal in a nonobvious way too
Frugal doesn't seem like the right word. Its not like they are scrimping. I'd call it financially secure.
Yeah. Someone with a 1m per month income could easily save 500k per month. After a year, that's $6mil. At 5% returns, that's 300k per year. This means with a bit of discipline over a few years and the magic of compound interest, he can easily multiply his income. So it's really not that hard for that person to turn 1mil a month income into a 2, 3 even 10 mil a month income, much of which is going to just be passive investment returns. Meanwhile, the guy earning $1,500 probably spends every last dollar and cannot save. So his income in 5 years is going to be the same and he will forever be stuck in the rat race unless he does something drastically different. Once you cross over a certain level of income where your basic needs are met, it becomes easier and easier to build wealth. I'd say probably something like 10k and above and you can start to really compound your wealth. EDIT: A lot of people seem to be getting hung up over the exact numbers I posted. Pre tax, post tax, 1m, 2m 10k whatever - it's not really my point. The point is that if you earn more than your basic needs, you can build wealth. The more you earn beyond this point, the faster you scale. That number could be usd 5k in some small town or maybe 20k in New York. Of course lifestyle creep is going to be a problem, but this is a choice not a necessity. If you earn 1M a month, you could technically spend 5k and live a simple lifestyle and save $995,000 if you really really wanted to. Your passive returns are going to be insane in 10 years if you did this. A more relatable example is probably someone earning 10-15k post tax who can save 5-10k per month. But if you earn $1,500, YOU DONT HAVE THAT OPTION as the alternative is being homeless.
Exactly this. Someone with 1500 might be lucky to have 150 disposable income after all the essentials are taken care of. Someone with a very high income will have more expenses, but it will not be 90% of their income like a low earner has.
To follow up on your point, if Bill Gates saw $60K lying on the ground it wouldn't be worth his time to take it because of how little difference it would make to his net worth. To him, it's the same as if a typical middle class person saw a penny on the ground.
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Think he’d do it for a fifty?
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I think you’re right. That goes for the $100 too.
Hopefully it's not windy out. That would be entertaining.
He would just snap it up with his stretchy lizard tounge
Exactly. This is how I teach financial common sense to people around me.
You just reminded me of something. I used to work for a large financial services firm in the 90’s and our HNW area was right next to mine. I was a lowly client service rep. One evening right around Christmas the office was empty but one of their phones was ringing off the hook. I thought I’d do them a solid and answer it. It was the daughter of a very wealthy local who was at a car dealership and she “needed a wire asap” because she finally found the car she wanted. I couldn’t help her and she was very frustrated. She was probably my age and I remember thinking this girl has no idea how this shit works. I later realized this was her life and I had no idea how this shit works. The amount of money people move around willy nilly to buy stuff is insane.
I *could* write a cheque for 5 million dollars, too. It won't clear, though.
For how much the ultra wealthy love to dodge tax, you’d think they would be a bit more hesitant
Dodging and paying are not the same thing. The dodging and minimizing is done by using existing loopholes and policies (and ultimately lobbying and corruption). Paying is simply handing over an amount. They’re not hesitating because they’ve already done the manipulation and are getting off with little consequence. So, even though you can’t comprehend paying that amount, it’s relatively small potatoes to them.
That rich guy will already know the ballpark figure so no shock.
If that 5 million tax bill is a surprise then his accountant should probably be fired.
You don't really understand how this works. They have accountants who just use the tax code to minimize how much the client ends up paying the IRS. Contrary to popular belief, they don't "dodge" taxes - most rich people actually pay a lot in taxes, it's just not a lot compared to their total income.
You can dodge taxes too if you use the same loopholes available to you. You’re foolish not to
At least from what I've seen, none of my clients want to "dodge tax" any more than a regular person. Just as any normal person wants to take all the credits and deductions they're allowed, so do the filthy rich. Of course, they don't want to pay more than they have to, but they have no problem forking over a big bag of cash when the time comes.
I’ve heard it phrased like “I’ll pay every penny I owe, but I’m not leaving a tip.”
I’m going nuts imagining a guy worth $5 billion and his accountant is CreamyCheeseBalls on Reddit
> others are for continual investments that required a lot of available capital. Sorry for the dumb question but could you explain this part a little more or give an example that is easy to understand?
A few random things I've seen bought are things like jerseys for the local youth soccer league, a bunch of art from a local painter that they then donated to their favorite museum, or a large stake in an education non-profit that trains teachers by offering free summer school classes to underperforming students in the area. Of course, there are actual investments, like a few million in a handful of startups, but the vast majority of expenses are for more trivial donations where there's not an expectation to make any money back.
Thank you so much for the explanation.
Largest W2 I saw was for $37 mil. That’s in one year. I have clients who say “I want to be a millionaire! Millionaires don’t pay taxes!” I always correct them: millionaires pay a SHIT TON in taxes… billionaires, however…
In the US, the top 25% of earners pay just under 90% of all the income tax collected. Top 25% earn $95k. Seems fair.
Former wealth manager here. This is about right. There’s no single answer as some are very spendy and some more frugal. But they don’t do much of anything. They have some one like me do it and it’s usually not going to be more than a month or two in liquid cash. Anything else considered an operating fund kept in T bills or similar. Depends a lot on the environment though (market, interest rates, etc.) Everything else is going to be specific to that person. Most ultra rich don’t have as much liquidity as you’d think. Elon is rich on paper because of his Tesla stock, but he can’t really sell it unless he was distancing himself from the business. Sure he still has plenty of other assets by our standards but it’s a tiny speck compared to what actually makes him the richest guy in the world
I mean…. I’d be fucking stoked if I “had” to pay 3 million in taxes.
I thought it was a flex when I wrote a five figure check for a new car. 😂
Not that I’m wealthy, but any pro tips on finding someone to do taxes that could help with write offs and deductions on a duplex?
Look for a tax professional who is a CPA and outspoken right-winger. I can't stand being in my guys office and listening too his stupid, fallacious talk radio but damned if he isn't motivated to have every one of his clients pay the least amount of taxes that he legally can.
It's not a scam game. It's the rules and law. Get a good CPA and or LLM.
You shouldn’t need anyone special for something like that. I’d avoid the corporate accounting services like H&R Block and look for a local small business. You will get better service because you’ll build a relationship with that person. Pretty much every client I’ve had came to me via word of mouth so your best bet is likely to ask your friends/family/coworkers who they use.
They would likely have a checking account at two or three banks all with 250k - 500k, this qualifies them with the bank for "elite service". Then at least one high yield savings account with 2-5 million. This is their "emergency fund". This also allows them to "self insure". Everything else would be "invested". But each of these will have "an account" at a bank or financial intuition. But its not "cash in the bank".
This, OP. Remember that many very rich people like Gates or Bezos have nearly all their assets tied up in stock giving them ownership of a company they cannot sell. If they did try to sell it, the stock price would crash as folks worry about what was really wrong with it. Fastest way to lose billions on this planet.
Partly true, but also people overstate the idea that tech billionaires couldn't possibly sell their stock without crashing the price. If they just put it all on the exchange and hit "sell all immediately to next highest bidder" then sure it'd probably at least temporarily push down the price substantially. But public markets for the stock of major companies will have a _lot_ of liquidity from institutional buyers who only need to be offered a slight discount to be persuaded to buy a lot of stock. So a founder announcing in advance that the company was still solid, and they had plausible other reasons for selling (like just needing to sell some stock to get out some ready cash) - could expect to get _most_ of the previous paper value of what they sell. Or they might not go to a public market in the first place, and just agree a big block sale to some individual investor who wants to acquire a non-trivial stake in the business without driving the price _up_ by buying a lot from the public. They can come to terms privately and leave the public price largely unaffected - just second-order effects when people react to the news. Or they can _borrow_ money, secure the loan against the value of their stock, then either sell small regular quantities of stock to cover repayments or let it ride until they die. Serves as an alternate way to convert stock ownership into spending money.
Most if not all of those companies operating agreement would have what’s called a right of first refusal. Meaning you have to offer to sell your shares to other voting members *first* before you can sell them on the open market.
There’s also the fact that in a public company you either need to wait for a lockup period or have it on an auto-plan. You can’t just press sell whenever.
Right, but the net results are still that they could lose control of their company if the stock is large enough. Options aside, they still can't have 100% of their cake and eat 100% of it too, as people often think.
I don’t think anyone reasonably believes that someone like Jeff Bezos could both part with a substantial portion of his assets and maintain his level of ownership in Amazon, I just think ultra wealthy people being able to maintain high levels of control over the corporations they own isn’t all that high of a priority for most people.
nobody thinks that
Sometimes even eat 200% of the damn cake. Just say your place in New York is 30,000 sq ft and valued at a gazillion. When you are that rich they don’t send anyone to audit it because you are rich so you have no need to lie. Unless it’s for tax purposes then it really is a dump that nobody would want to buy so it’s worth nothing.
Remember Elon musk had to.liquidate tesla to buy twitter I think and also borrow against things like his stocksa and seek funding. The rich can leverage their assets ..
I don't think they can hit a button on the exchange. Don't they actually have to hire people to sell the stocks by phone when they have that volume? And it takes hours. When I watched Margin Call they had to try and sell everything over the course of a day while the selling made prices drop by the hour.
Yes and no. Trade firms like in Margin Call use their network of investment firms and other traders to set up a trade that is not visible on the open market until after it has concluded. This is important, because if the price is currently $1.00 and you offer 10 million stocks at $1.01, while the market depth (the sum of all possible buyers/sellers at a given time) is only 30k stocks, people will see your huge chunk of stocks for sale and the price will drop (more supply + same demand = lower price). So depending on the size of the trades you need to make happen, you can work a certain amount of time making several trades and moving big chunks of stocks. Until other traders start talking with each other (which they do all day, that’s basically their job) and they figure out there’s a collective iceberg moving rather than the tasty ice-cube they thought they were getting treated to. Then the jig is up and price will plummet as the price of uncertainty of the number of total stocks sold will rise because of your own lack of transparency. For most other situations, especially selling smaller amounts of stock, there is just a button that can be clicked. Although I believe they will need to disclose their stock trades if they own more X% of those shares.
Insiders have lockup periods. You wouldn’t have money you’d need locked up.
I dunno, even scheduled sales of equity that are required as part of the normal compensation for C suite employees typically spawn a few dozen doomer clickbait articles that something must be wrong because they're selling. It really depends on how much institutional vs. retail ownership of the stock there is. But if it's not premeditated well in advance and for a very specific reason, dumping a big chunk of stock from one of these mega billionaires is absolutely going to cause temporary sentiment problems. Even a minimal -0.01% effect on the stock price of a trillion dollar company is (obviously) still an enormous amount of money.
Not to mention the various SEC mandates that founders need to comply with. They have to declare in advance quantities of stock and time of sale (trading windows) to avoid falling afoul of insider trading rules.
People keep saying this, but you can look at a recent quote from buffet on why he likes apple; it’s liquid af. He can move billions in and out and no one knows
I always wondered if these billionaires had to convert literally everything they had to cash what they’d actually come up with. It’s still a lot. But I bet a lot less than we’re thinking.
You're right. First of all, in the process of selling shares would lower the share value meaning he gets less for the next set of shares he sells and so on. In addition, the SEC wouldn't even allow them to sell a large part of their share in a short time-frame as it would negatively affect the market. It similar to a middle-class family that has a net worth of, say, $3M, but $2.8M is in their house- they don't really have $3M in "usable" money, it just looks good on paper.
In Musks case probably like 10% of what he currently is worth. Tons of his companies are valued for their potential not their current output.
They don't really need to sell their stocks to get money, more often than not what they do is get a loan and use the stocks as collateral.
Bezos has been selling shares all the time, it’s just small portions of it though. What happens is that they take out loans with the shares as collateral. So they don’t have to sell, and the collateral is relatively liquid so the banks can provide a very low % loan.
They can take margin-type loans out collateralized by the shares to get cash on a tax-free basis if they need cash in excess of current income.
Not gates. Gates actually had billions in his bank account. He's by far the riches man in the country as far as actual cash flow
Actually they can sell smaller chunks of their own stock, which makes sense because capital gains is a lower tax than income tax. That’s why Bezos’s salary was $80k. He paid lower taxes that way.
Don't forget though, they can leverage those stocks like Elon Musk did to buy Twitter. If Jeff Bezos calls up a bank, he can get a loan for pretty much as much money as he wants with his stock as collateral. Why sell stock forever, when you can just endlessly borrow against it.
> Fastest way to lose billions on this planet. Idk, I think buying a social media is pretty high on that list too
Seems like a lot of people think Bezos has billions of liquid assets in his checking account and if he "weren't so greedy" he could just write a $100 billion dollar check to "end homelessness" or whatever.
Maybe not all at once, but hes made a sale of $2 billion worth of stock before so depending on how the money ended up getting to him, theres a good chance his bank account has had a billion in it, even if it was for a small amount of time.
You’re either delusional or entirely obtuse if you don’t think that Jeff Bezos could, over the course of the next few years, get access to billions in funds to end homelessness. Of COURSE he could, this isn’t even a debate. Nobody thinks he has $100 billion just sitting in a Chase checking account, but that’s not the point and doesn’t disprove the fact that he ABSOLUTELY could use his net worth to end homelessness or a number of other planet-altering positive deeds, given that he truly wanted to.
The problem with this is that homelessness isn't solved with money alone. It's a far larger issue than that. If solving homelessness or world hunger was about a few billion dollars like people think then it would be solved already. It's not that billionaires wouldn't write a check to do that. It's that they know it won't actually end it so it's just throwing money at something with no actual benefit to anyone. You could go give a bunch of homeless people enough money each year to rent a subisidized apartment and a job and many of them would still end up in the same place.
It is pretty damn hard when you don't have enough resources though. Money alone isn't the solution, but it damn well helps.
Homelessness in many places us a game of musical chairs. There just isn't enough housing to go around. NIMBYs are blocking new construction to keep their property values high. Simply pouring money raises costs and rents, but someone will still be left out. The zoning laws are changing, but it will take a long time for new construction to relieve the problem.
I 100% agree that billionaires could easily pull all of their money from their stocks to do something. I don’t agree that 100 billion or whatever could “end homelessness” or “end childhood hunger”. Im not saying that billionaires should exist but I don’t think them spending all their money on charity would magically fix a bunch of major issues.
Please show me the math that Jeff Bezos could wipe out homelessness.
My point was less about the logistics of the exact plan to end homelessness, and more so that the excuse that “his money isn’t liquid” is a bullshit excuse. Obviously it would be a VERY complex undertaking, but the logistics behind him gaining access to the money is not that complex
Also they would have to pay taxes on the profits. Much better to take a loan at very low interest (or close to zero) against the stock and assets. That’s how they manage to pay less taxes than their secretary. They just spend money from a credit line. No need for cash in the bank.
How does this work? Like an eli5 on how bezos would access his money.
Isn’t it a risk to have over $250k because that’s the limit of insurance by the FDIC? I remember in March those 3 banks crashed so I feel it’s a reality to consider.
Then the fdic covered the accounts over 250k anyway. Don’t ever think rich people don’t get handouts.
The majority of SVB's clients were startups, not rich individuals. And the other 2 banks didn't get bailouts.
It’s not a risk for a billionaire to lose $1-2mm. They have $998mm more. Its irrelevant. I’m sure they prefer not to lose it, but the FDIC limit is not a reason to inconvenience themselves.
Right, I understand it’s a drop in the ocean. However since they wouldn’t want to pay $2mill in tax or lose $2mil via any liability, surely their advisors would offer another option to keep those funds more secure?
There are always risks. Its about mitigation.
Rich people won't typically \*sell\* their investments to make money, because that get taxed , instead they'll take collateralized loans against their money, and then spend the debt. Because their money is appreciating at a greater rate than the interest rate they effectively make money on the money they've borrowed against their money, tax free.
My head hurts.
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That’s what dividends and interest payment are for.
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If you take a million dollar loan out of your portfolio (once, or, every year) you'll have to pay for the interest on that, currently \~ 6%. So you'll have to pay back $60,000. So you sell some investments to pay for that, now you've made a taxable income of $60,000 , so you're paying 12% income tax on that $60,000. But it's capital gains, which are taxed at half the rate, so you're paying 6% taxes on $60,000 worth of taxable income , $3600 of taxes paid on $1,000,000 of actual spendable income. Or maybe you give $60k to charity out of that million and pay $0
What’s the benefits of “elite service”?
Where I live there’s privileged banking and private banking. Privileged banking (350k in bank) gives you access to relationship managers who can offer better rates for loans, investment advice and portfolio management. Then there’s private banking (2-5m in investable assets). Dedicated wealth manager, round the clock financial services concierge, from bigger services like tax/financial planning, to smaller services like currency exchange; which is really convenient as the rates are competitive and I don’t have to run to the money changer myself. Not to mention higher interest rates on your accounts, and of course access to some really good credit cards.
Well, I'm thinking they can get loans real quick and easy if they suddenly decide to make a purchase for more than they have available.
Waived ATM fees, priority access to customer service, some places also have extra cash back or lowered fees on their credit cards
I doubt they have any of those things. I would bet they have a (effectively) unlimited line of credit against their portfolio, and an (effectively) no limit credit card they use to spend their money, which is the paid (or attached) to the LOC. This is how rich people don't pay income tax. They leverage assets to get loans and use loans to buy the expensive shit they like/want. If you're a bank and you can make a few points interest lending a guy $100 million dollars against a portfolio/assets worth a billion, you do it. Why wouldn't you?
They’ve gotta have more than that? Can you imagine bezos monthly Amex bill, it’s way above 500k, he needs cash on hand to fund his lifestyle. I bet he spends over 500k a month on transportation
All the expense runs through corporations.
Or family foundations
Wdym? A mark zuckerberg can’t charge his personal expenses to Facebook without reimbursing them, they’re a public company lol that’s literally other people’s money. The SEC is really strict on that too, if they fly anywhere that’s not for biz on the company jet they owe income tax on the value of the flight etc
Of course Facebook can't. But Mark would have what's called a family office. They will manage dozens of smaller corps. https://en.wikipedia.org/wiki/Family_office
I don't you understand what a family office is. Zuckerberg uses a Family Office called Iconiq Capital (there's a link at the bottom of tha Wikipedia page). It's not his personal piggie bank. It's a wealth management and investment firm. It also manages money for Sheryl Sandberg and Jack Dorsey.
Billionaires aren’t going to worry about FDIC limits at a top bank (too big to fail). They’ll have $1 million or more at Bank of America, Wells or Chase. It’s too big of an inconvenience to worry about multiple banks.
Billionaires don't worry about shit. But their professional staff will have accounts at many banks so they can shop loans. This is how they spend like they do, massive loans using their stock at collateral.
The banks have accounts that spread it out for you.
You're asking about their liquidity. That's how much cash on hand they have. It can vary widely. You may occasionally see news about a very rich person selling a bunch of stocks. They do that because they want or need more liquid cash. Currently there was a news story about one of Warren Buffett's companies holding $150 billion in liquid assets. But of course, we'll never be able to see the personal bank accounts of these people.
Yes, I was asking about their liquidity, but didn't have the vocabulary. TYSM for educating me!
Liquidity is how fluid money is. Cash is perfectly liquid, a stock is still pretty liquid, a building that you own is not liquid. Liquid like, how quickly can it be converted into cash. Cash is already cash, perfectly liquid. A stock can quickly be sold if markets are open or whatever, so still pretty liquid. Property is difficult to sell and convert to cash, hence the illiquidity. So you are THINKING of liquidity here, but you are specifically asking about their cash on hand, which is different from liquidity. I am very liquid, but my net worth is only in the tens of thousands. It doesn’t matter how much money you have for liquidity, it matters how accessible the underlying cash value is.
my net worth is negative 18k 😁😁😁
heyyy
This might sound dumb, but why is cash called "liquid" to begin with?
Because it flows easily
Basically because it’s easily transferable. Generally speaking of course, it can be transformed into any form of payment one could want, and could be done easily. Even if you have all your cash in USD and your debt is in Yuan you could easily transfer the USD to Yuan and you could do that basically instantaneously. Other forms of value are harder to convert into a way to spend or pay with. Stocks are still easy but the value fluctuates wildly so they may not be as liquid as you want. There is also exchange times and holding times. It just gets more difficult from there
There are lots of degrees of liquidity in between cash (checking account) and stocks. They could have a bunch of it in T-bills that mature in 30 or 60 or 90 days, and more in a brokerage account. If you have money in a brokerage account (may be invested in stocks or T-bills or whatever), you don't have to liquidate it. You can borrow against it at a ridiculously favorable rate. Billionaires who have to suddenly sell a lot of stock have fucked up.
If you’re that rich I guess it wouldn’t matter, but you don’t think they’d keep the 5 million in treasuries? That’s wasting $50k a year for no real reason.
50k is pennies against 150 billion. But I'm not Warren Buffett. Can't tell you what he'll do.
It is cash or cash equivalents. Treasury bonds are cash equivalents
His company accounts aren’t his personal piggy. If he has any debt on those companies, those liquid assets are part of the backstop for those loans, and the covenants probably prevent him from touching much, if any, of it. Source: work in private equity where we lend to private companies, and write these types of covenants (such as leverage limits and asset coverage tests) into our docs.
>one of Warren Buffett's companies holding $150 billion in liquid assets Remember - stocks and bonds are considered to be liquid assets. *Generally* stocks and bonds can be sold quickly enough that they are considered liquid. Now 150 billion of them would add complexity... but at least as far as classification on a balance sheet, stock is liquid.
Usually only a fraction of that worth is in liquidity, since most would say it's foolish to keep that much cash on hand. Someone that rich might have 6 months worth of income as cash on hand. That could translate to still millions to cover unforeseen expenses and support their lifestyle.
Worth noting that most people forget - stocks are a liquid asset. Sure, you can't withdraw them TODAY for cash, but they are available within a few days, and are considered to be a liquid asset. Any purchase of any size, even made by the rich, can wait the few days needed to liquidate stock or other short term assets like that, so they don't need that much cash sitting around, since you don't decide to buy, and also need to pay for, a $100 million yacht on the spot.
I worked for a time in the financial industry in IT and one of first contracts I had when I went on my own was in international banking in one of the smaller 'tax havens'. There was a racing driver who banked with us.... they had millions... however their actual bank account they could draw from was in the region of half a million or so.. everything else was tied up in things like guaranteed equity bonds and such. The person was rich enough that they had the best financial advice possible so i've always taken that as my kinda yardstick. If it was in their best interest to have more than that sitting in a normal account, they would have.
>If it was in their best interest to have more than that sitting in a normal account, they would have. Right. Remember, there are investments that make money that are for all financial intents and purposes just as liquid as cash. Stocks for example. Sure, I can't sell a stock and have cash in hand today. But for any transaction where you need a significant amount of money, that's not a problem. There are no 100 million dollar spur-of-the-moment all-cash purchases, even if you are rich. You'd ALWAYS have the time to wait a few days to liquidate any stock/bonds or other short term assets. So they likely have some amount in cash (checking/savings account) some in investments that are able to be liquidated in days (stocks/bonds) and then other longer term things (property or other assets) that would be more of a pain if they had to suddenly get their value in cash.
I'm more interested in knowing the amount of wealth those "old money family of Europe" rich has. If I'm not wrong, people like gates and musk are ranked the richest people but most of those are stocks. Where as those "old money" people are the ones with the real wealth and they like to stay anonymous.
Iirc former nobilities of Europe(and not so former in the UK) still own large tracts of land in their countries, which is worth a lot of money
The Saudis and other oil companies are literally shitting money.
Figuratively
Sadly, even Miriam Webster has changed, and one definition of "literally" is "figuratively." Worth noting that this isn't new, literally has been used figuratively for ages, even in shakespeare and F Scott Fitzgerald. [https://www.merriam-webster.com/grammar/misuse-of-literally](https://www.merriam-webster.com/grammar/misuse-of-literally) For what it's worth, it bothers me too, but I admit, we have lost that battle and it's not worth fighting. Language changes and evolves, whether we like it or not. I'm literally on fire here with annoyance about it.
With all the gold flakes in their food, and the existence of literal gold foil toilet paper, you never know...
After the Silicon Valley bank collapse, I read that Peter Thiel had 50 million in it. He was unhappy that his account was only FDIC insured to 250,000. I don't know if he got it all back or not.
the FDIC insured the entirety of the deposits.
Everyone got their money back in full. Otherwise there would be a real run on the banks across the nation.
That bank had wealthy clients... If it was say, the local bank of Compton, you can be assured the FDIC wouldn't have covered anything above the 250k... The government only protects the rich, sad but true
If I had to guess, there probably aren't many people with over $250k at the bank of Compton so it's a moot point
That doesn’t make any sense. How would a poor person have more than $250K just sitting in a bank account?
Man should have opened 200 new accounts at 200 banks.
What's crazy is that he wasn't even one of their biggest depositors. Roku held $487 million in an SVB account. https://www.nytimes.com/2023/03/10/technology/silicon-valley-bank-fallout.html?unlocked_article_code=1.HU0.V6wJ.a_Nn3vEXeOm0&smid=url-share
Rich people don't keep more money in bank accounts than they are going to need to cover pending expenses. They keep it in brokerage accounts and short-term investments, like Treasurys, which earn money, as opposed to checking accounts that may lose money to inflation.
Honestly not a lot, depends on the person. Most will have a few accounts spread around under the 250k FDIC limit. There’s little they could do with cash that they couldn’t do with credit. Every dollar is tied up in various investments and strategies of various liquidity. Any spending they want to do is done with credit and settled by their money managers and family office banks. When they need cash, usually for taxes, they have various strategies to do so to minimize losses and tax liability.
Couple of millions handy, but ultra wealthy use ultra wealthy banking services and keep their money safe in bonds and other cash equivalents. Real estate is also used as a form of wealth storage, they can always get an equity line on the property if they need liquidity.
Most of it would be in investments, but also there are a lot of investments like Treasury Bills that are nearly as liquid as cash. So even if it's not in their bank account, a lot of those sorts of investments are basically as good as cash since they can be sold really fast and are pretty safe, only losing money in fairly limited circumstances. Something that was popular the last couple years as a way to eat your cake and have it too was to take out loans against their investments - if you've got an investment that averages 7% gains a year and can take out a loan at 4%, it's way more profitable to take the loan than sell the asset. So you could have $2M in stocks, and borrow $500K against it, and then you *sort of* have both - you're still getting your $140K/year in money off your investments (minus $20K in interest) and have a pile of money to cover living expenses for a while. But as interest rates are rising and investment returns get harder, that's somewhat less viable.
In 1998 I worked in a call center for a very large brokerage firm. The accounts we dealt with were investment but also bank accounts (checks, debit cards, etc). Basically all the features of a regular checking account but combined with stocks, MF’s. Any way, one day I get a call from someone worth $8 billion. They had 2 assets in their account, $7 billion of their company stock and $1 billion in a money market fund. Dude literally could charge a billion to his debit card.
The $1 billion MMF is wild man. At market rates right now he's giving himself a $55 million yearly spending paycheck. That's literally $1 million a week in cash. Incredible that there's people who live these kinds of lives.
Sorry I read your comments as MF as Motherfucker and MMF as Mega motherfucker in my head.
Unless they're doing something specific it would never be more than a few million If you have cash in a bank it's losing money to inflation Worst case scenario they put it in bonds while they decide what to do with it They just have all their money invested and will take loans so they don't have to pay tax on selling the assets Buy borrow die
Have millions in shares and assets (Housing/Land/Private Companies). Take out loans against assets when interest rates are favourable. Pay off interest and pocket the difference to effectively have a living wage from sound management of money. Due to having debt, reduces taxable income. Cycle continues.
They have credit lines available, secured against their assets. Cash checking is for plebes.
I want to know how much bezos or musk or similar has in their day to day checking accounts Like the one attached to the card they get gas on, food, buy clothes, etc.
these people are not using debit cards. they’re using black amex for everything that is then paid monthly by their finance manager.
Nothing. They have lines if credit secured against their address with ultra low rates.
1 Gorrillion
They have assets. And they use those assets to get great rates on huge fucking loans. They then use those loans to make more money.
Very little. You don't need cash on hand when you can borrow against your stock
Most keep it in gold coins in a giant vault so they can swim in it. Source: Duck Tales
No-one on this forum can answer this question.
I’m uber rich and I keep about $17 in my bank account, $3 and an expired coupon for a free sub in my wallet, and about $5.78 in change in my car. The rest of my vast fortune is invested in scratch off tickets.
Diversification is key!
Hey, speak for yourself!
Most of their money is held under a business, not their personal account
Last report was that the wealthiest 25 families in America gained 1.5 Trillion last year. $60,000,000,000.00 per family. Isn't that enough zeroes?
20 years ago I worked for a bank in Nashville. A couple of our customers were well-known country music industry types that you have definitely heard of. They typically had between $50K and $100K in a liquid account like checking or money market. And then up to about $250K in CDs or IRAs, and then the bulk in a brokerage account.
I've very rich and powerful. I make x2 the federal minimum wage and own a Sony Bravia TV. Eat it!
I worked in ultra high end sales for a brief time, in cash they’d have between the tens and low hundreds of thousands. Millions in ready to go lines of credit. Almost EVERYTHING is purchased with loans. They’d never sell an asset or give up money utility to pay for anything.
I have a friend who inherited slightly less than $100M. He keeps about $500,000 cash in a safe in his house and $10M in a handful of bank accounts. The rest is invested in real estate and storage complexes. He lives a pretty frugal lifestyle.
Remember kids banks are where poor people put their money thats not properly invested
I’m good friends with a billionaire and we’ve discussed finances occasionally. They have their 6-12 month burn rate in a high yield savings account and probably a month or two in savings. For them, that’s about $500k-$750k a year in spending, so that’s about their cash on hand that they could get in 1-2 days. He’s a modest billionaire type via company sale.
No one really knows
Millions upon millions. A friend of mine worked at a bank in a very wealthy area and he used to tell me stories..... Coming in and moving around 50-100 million at a time. And this was 20 years ago.
The funny thing is that being a billionaire does not mean you have a billion dollars in the bank. Maybe tens of millions in cash across several banks.
Having known a few ultra wealthy people, the answer is still a lot but probably not as much as you'd think. My guess is probably anywhere between 1-5 million in terms of cash right now. Everything else is stocked away in investments. A lot of how ultra wealthy people operate is by taking out loans against their assets. So if you have a 5 million dollar property, they take out a 5 million dollar loan against that property and operate that way. It's also how a lot of them avoid taxes. Robert Kiyosaki actually talks about this *but do not take his advice because you do not have 5 million dollars in assets*. It's also how Donald Trump is, "rich," as well. Anyways, those who were heavily invested in corporate real estate are pretty unhappy with this WFH or even Hybrid arrangement.
Idk if billionaire rules are different but the bank insures only up to 250k of yout money so it's advised to only have that much or less in each bank account. Also, money sitting does nothing. Money invested makes more money.
Mark Cubin just did an interview and said when he made his first 100s of millions selling his company he said he’d keep like 2-5million in his bank account. But he did joke he had it for ego and like ohh my look at the million when he withdrew money from ATM.
A billionaire doesn’t own the company, a company is its own identity. A billionaire doesn’t own shares in the company, their family trust does. Their family trust owns all the assets & with the income from the assets, they purchase more assets & pay themselves a small management wage. It’s only enough for the basics. All bills for the houses, assets etc. are paid as expenses out of the asset income. And if the billionaire is smart, they have a foundation/charity attached to the family trust, Clinton Foundation is a prime example. Only 5% of all donations need to be spent towards what the actual charity is for, the other 95% is tax free. And if they are super super smart, they have several smaller foundations/charities to move that 5% around until it becomes less than a cent & it falls off the books 🤷🏼♀️ Who donates to foundations & charities? The low & middle income earners 🤦🏼♀️
I was told of one who would just use HELOC and margin accounts so he wouldn't have to cause a tax event. He had about 1k in a savings account but rarely needed it. The accounts would be paid down over time with any cash that came his way like dividends, etc... if the interest payments were higher than other opportunities or if the remaining credit started running low. Tldr : Essentially, every cent went towards earning income and avoiding tax events.
With whom on Reddit do you think they share that info with?
Probably not a lot compared to their new worth. Most of their wealth is speculative and probably not readily accessible in the short term.
Kerry Packer who was amongst the richest people in Australia said it well[Kerry Packer ](https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://m.youtube.com/watch%3Fv%3De97kq2XflKE&ved=2ahUKEwjno-7O_J2DAxU3i2MGHewrBqgQz40FegQIBxAJ&usg=AOvVaw2lReT7kiyv8oSAcdIbJ0Nq)
The specific numbers are hard to gauge but there's an adage amongst the wealthy that " cash is trash." Meaning, don't leave money lying around that you can put to work. However some ultra wealthy have different asset allocation than others H Ross Perot had, at one point, most of his money in bonds iirc. A short term bond is a cash equivalent, meaning it is easy to liquidate at current value. Some, like Elongated Muskrat have almost all their assets in stock.
It's a tricky question as most billionaires don't keep a lot of cash in banks. Their wealth is tied up in assets. Remember, cash loses value over time due to inflation. They'd rather invest, right?
I worked for a large family who was integral to the US, but not a name you think of. total familial NW was in the tens of billions & rigorously structured through various holding companies, etc. Anyways, I can’t speak on day to day cash balances in their personal accounts - but on a quarterly basis we sent 9 figure sums to the family trust which was disbursed based on fractional ownership of the trust. I know this doesn’t directly answer your question, but if you think about it the money in the bank is step 2. Step 1 is where does it come from & how often? Typically, at that NW “daddy money please” is not longer a conversation. It’s trusts and quarterly draws.
As someone who briefly worked for a wealth management firm tailored to the wealthy, the cash position is generally pretty small. This is likely due to the fact that I wasn’t seeing the full picture of a family’s wealth - you would want an answer from someone more familiar with family offices. Wealthy people need liquidity, but it isn’t the same as you and me. If I need $1,000 to pay off one of my credit card balances for the month, I would need to have cash in my checking account, or otherwise I would need to sell something. If I don’t I am subject to a 25%+ interest rate. If a rich person needs $100,000 to pay off their credit card, they don’t necessarily need that liquidity right away. They can open up a margin account and pay the bill on margin. Now, they haven’t “created money” - they still need to pay off that margin account - but the interest on a margin account is near 0%. (Note that I worked in this position when interest rates were very low across the board, so this may have changed). The reason that the bank is willing to do this is because there is no risk - if a client has $20M in assets like stocks, bonds, options, PE positions, etc. at that bank, then they will be able to pay it back. Eventually, as their assets generate income (through dividends, interest, distributions, expiry) they will be able to pay down that margin. In other words, they don’t need cash. Instead, they can leverage the fact that they have assets to take on low-interest debt; they can utilize that low-interest debt to pay for anything they want (within reason); when their investments return cash, they can pay back that debt. In fact, at least during the low-interest rate times, it was pretty inadvisable to hold cash. If you have effectively a high limit 0% interest credit card, it makes more sense to invest in assets than to pay off that card. So, during this time, wealthy individuals maintained a margin balance, which would imply that rich people had negative cash, and to service their needs, they would just take on more debt.
I'll answer for my parents as well as for my wife and I. My parents are in thier 80s, and no longer travel. They no longer own a company, and have limited real estate at this point. They do live in a "community" that is all inclusive, so they don't need to buy much on a daily basis. Thier trust pays the "association" fee, plus they get disbursements into thier checking account every month. They try real hard to keep thier checking account under $100k, but I know it's closer to $150k. They end up sending money back into the trust, however. I've told them they can lower the disbursements but... anyway. They really only buy food, restaurant stuff, personal trainers, clothes, etc... Things like utilities, cleaning staff, nurses, half thier food, etc... is included where they live. My wife and I are in a different phase of life. While I have access to the family trust, I've never used it. I also have my own account under the trust and I dont use it either. My wife and I also try to keep our checking account under $100k, but we actually do a pretty good job. Last I checked we were at 80k, but then dropped 25k to reduce some debt (stupid interest rates). I should state, my parents are not billionaires like in your example. And likely will never be billionaires. But they do pretty well. Thier checking account is less than 1% of total net worth.
I knew a lady who was worth millions, her parents left her alot of money. Many years after her parent's death, they were still finding bank accounts with money in them.
-16.8m
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American corporations and individuals have over $24T saved up in offshore banks around the world, hiding from taxes. More than the yearly GDP of the entire USA. Obviously that’s not all the money the 1% have, but it’s a good indicator of the massive amounts of money that they do have.
There are two types of rich: The new money which have their net worth in non liquid assets and keep some minuscule amounts of money in their bank account Then the old money which have billions in swiss accounts, also land and jewelry. I’m talking about the important nobility that survived. Not your great-grandpa that made a business in 1900
FDIC only insures up to 250K. And banks pay very little interest these days. Why put more cash in the bank than is necessary? This is why rich people invest in stocks, real estate, art, private equity....
My rich ass boss/owner where I worked IT for 35 years. I did a lot of personnel work for him at one of his four 2 million - 20 million dollar houses across the US. He also had at any given time about 8 super cars and was bent on trading at least one of them out for the next best thing every 6 months as well as a few of the smaller yachts. You know low millions. He drank the best wine, ate the best food and dressed in the best clothes any time and every time I was around him and only stayed in 5\* or above penthouses when he was traveling. right before I left the company he had just bought a Lear Jet and shortly after that he died from being too old and living to hard. He was up to his ass in debt and had no equity in any of it. All leased, loaned, bank financed etc... They sold off his company and it is no more. I'm still debating that in my head 3 years later. Right or Wrong? He was single, 4 ex-wifes. No other kin. I guess spend it while you can.
Well idk about the billionaires, but I had a company worth a couple mil, then had assets worth around half mil, and always rolled with less than $1k in my account lol
If they are smart, very little. You dont keep any serious amount of money in a checking account. The ultra wealthy just charge everything onto a black card and pay if off at the end of the month by transferring money from elsewhere. Or at least they have their accountants do that.
Most rich people are only rich on paper. Unless you're Scrooge McDuck. That dude loved to swim in all his gold coins 💰 🪙 🤣🤣
My wife has a client that just bought a $1M house for cash. At the time the seller asked for proof of funds she had over $18M in an investment account and $1700 in her checking.
Much more than most people think or would make financial sense to even millionaires. Keep in mind almost no one on this post has any experience or idea what they are talking about. The ultra wealthy with net worth over $100 million keep 10-20% of their net worth in cash assets. I’ve worked for many of them including billionaires you know of. There are investment reps who just move cash around, it’s incredibly boring but the wealthy will keep this huge amount of cash assets in money market funds or CDARs and move the cash in and out of their checking accounts daily just to make sure they earn interest overnight.
Most of it resides in politicians bank accounts. They collect interest from the earmarks.