It's easy to imagine ourselves as millionaires and billionaires, and just like Scrooge McDuck (an extremely wealthy cartoon character), we often dive into our Olympic-sized pools full of gold coins, lounging on couches made from bags of money, eating our dinner on tables made of solid gold bars. After all, where else are we supposed to keep our riches? In the bank? No way!
It's a wonderful life we live in, and there's no way I would trust a bank with millions and billions of dollars. So, where exactly do the super-wealthy keep their money? Do they store them under their mattress like the olds in the 90s? Do they invest it in fancy cars, properties, and startup businesses?
Well, today, we're going to take a look at where the billionaires of the world keep their money. We'll glance at some of the portfolios of well-known top world billionaires, and I might even give you a little tip on where I keep my money as well.
First, let's chat about the most obvious place people keep their wealth – Banks. I know I just made a statement about not trusting them, but banks often come in handy, especially when you're super-rich. The world's billionaires don't stroll down to a bank and wait for a teller when they deal with banks. They deal with them through a private wealth division. A private wealth division is explicitly made to deal with high net worth clients, also known as "HNW clients". These private wealth divisions have a personal wealth manager who is specifically trained to handle many zeros, commas, and investments.
Often, high net worth clients have their specific banker who manages their portfolio and assists them with their everyday needs. The customer service is unmatched, I mean is there anything much better than looking over your fortune while sipping a glass of champagne your wealth manager has just given to you? It's hard to top that kind of customer service experience.
Additionally, high net worth clients get a few more wonderful benefits even though they have the money; they often don't have to pay for wire transfer fees, transfer checks, or safety deposit boxes. Do you see why the rich are highly-respected individuals? But even with this special treatment, high net worth clients nearly have that much in the bank. A recent study found that the average billionaire has approximately 1% of their net worth in liquid assets. Yes, that means it's perfectly realistic to think that the likes of Aliko Dangote, Jeff Bezos, and Elon Musk might only see a few thousand dollars when they pop their debit into the ATM.
Billionaires have little in liquid assets primarily because diversifying their wealth is incredibly important. There is no promise that a particular company or investment will succeed, which means that placing all your money into one business is incredibly risky.
If Dangote took all his money and invested it into a company that turns cotton into textile and shockingly that business failed, well, old Aliko Dangote would be out of luck. Instead, billionaires spread their wealth across dozens and dozens of investments.
Jeff Bezos, for example, has an entire website that details his investment portfolio, and it is quite frankly all over the place. He has a 3% stake in Business Insider. He has millions invested in Unity Biotechnology – a company that researches and develops pharmaceuticals to help prevent and alleviate age-related diseases. He's also invested in a much less serious business, "Glass baby" – a company that creates glass votives for candles.
Then there are his investments in Airbnb, which totals $112 million and his investment in Uber, approximately $37 million. Of course, there are even bigger investments like the Washington Post, which he bought for a quarter of a billion dollars.
But Jeff Bezos isn't the only billionaire on everyone's radar, even though he's one of the most fun to talk about. There is his runner-up Bill Gates. Bill Gates's investments are through his and his wife's foundation, the Bill and Melinda Gates Foundation. It is by far the most head-turning investment in their portfolio and has 50 million shares of Berkshire Hathaway which is valued at $11 billion. One might assume the second-largest holding would be glamorous or business savvy, maybe a tech company or a Forbes 500 company. But when it comes to Bill Gates, it's anything but glamorous.
His second-largest holding is Waste Management Incorporated (WMI). That's right, those green trucks you see driving around actually make the big bucks. The foundation has 18.6 million shares in Waste Management Incorporated, which has a market value of $2.1 billion. Then there's the Canadian Railway Company, this might seem like an investment of the past, after all the famous Vanderbilts made their money on the railroads when cowboys were still roping out west. However, the Canadian Railway Company is vital for transporting goods and industrial supplies, even today. The shares Bill and Melinda Gates Foundation owns in this portfolio have a market value of $1.5 billion.
The foundation is also invested in Caterpillar Incorporated, a company that manufactures heavy equipment. It also has stakes in Walmart. It's hard to lose on Walmart, I suppose.
So millionaires and billionaires diversify from Walmart to Berkshire Hathaway, even to candle votives. Business is often the third most valuable asset for millionaires, directly after primary residences and retirement accounts. But for those with a net worth of over $20 billion, business tends to be their most valuable asset. That being said, billionaires still invest an incredible amount into the property. While the housing market is known to crash every once in a while, it's still a reasonably good place for the wealthy to invest and park their cash.
Mark Zuckerberg has invested his Facebook money in some sweet eggs across the United States. He owns a $100 million property in Hawaii, where he probably retires after finishing his day of surfing during the weekends. He also owns a $59 million property in Lake Tahoe and several million-dollar properties in Silicon Valley.
All in all, he has about 10 properties worth millions of dollars in his portfolio, which I commend him for because I'm a big fan of real estate. I've invested most of my money in properties around the globe through real estate investment platforms and lands in the suburbs of Lagos, Nigeria. It's good to know if I ever need the money, I can toss one of the lands and be back in green within weeks.
Since Jeff Bezos is the wealthiest man on earth, it's no surprise that he's one of the United States' largest landowners. As of 2017, he was the 27th largest landowner, even surpassing logging companies and prolific ranch families, and just three years later (2020), he was the 25th largest landowner in the world.
Jeff Bezos likes scooping up as many properties as he can. He has so far dropped $80 million on three apartments in New York, $53 million on a property in Medina, Washington, $23 million on a home in Washington DC, and an undisclosed amount on a 165,000-acre ranch in Texas.
In addition, he shattered records by purchasing the most expensive home ever sold in Los Angeles, a $165 million called Warner Estate. But that's not the only property he owns in the city of Angeles. He has purchased over $114 million worth of underdeveloped land in Beverly Hills, which he is sure to turn a profit on.
Aside from stocks and real estate, there are dozens of other places where billionaires like to keep their money. The owner of the largest hedge fund in the world 'Radelio', firmly believes that 5–10% of your wealth should be invested in gold. Maybe some of us like to have a Scrooge McDuck swim after all.
So, there you have it, where the super-rich keep all their money. What would you do if you had a few billion dollars? What would you invest in?
If you enjoyed reading the article, make sure to like and share it with your friends and family.
Tags:
Business and Finance