We have all seen the Forbes
list since time immemorial where the richest people on earth are ranked. For along
time, Bill Gates was the reigning champion of the being the wealthiest
person on earth. However, he has been overthrown by the King of E-commerce, Jeff
Bezos, thanks to his trillion- dollar company, Amazon. In my opinion, Jeff
Bezos may be the richest person on earth on paper but Bill Gates still reigns
supreme when it comes to wealth accumulation and diversification, here’s why.
Rich on paper
Most of Jeff Bezos's "wealth" is from evaluation of his Amazon
stock prices. The higher they are, the richer he is. However, he can't actually
buy things using stocks which would mean he has to sell them and am sure as
hell he doesn't want to that. So how does Bezos afford luxury items? He is able
to liquidate his stocks giving him a few billions. However, he cannot liquidate
at a fast rate as that would signal he has lost faith in his company and would
make the company less valuable in the stock. So how does he come up with extra
cash to finance his projects like Blue Origin?
It's actually simple. The bank gives him credit for his spending which given is Jeff Bezos, is a very affordable interest and can be paid much much later. The bank justifies this by seeing Amazon is a very valuable company after all it is a trillion dollar company, and man behind it, Bezos, is even more precious. So by being in good terms with Bezos, the bank will profit in the long run.
Diversification
is the name of the game
On the flip side, when it comes to Bill Gates, he is a different class of
Billionaire. If we were to use classes, he is an upper-class billionaire. What
this means is that Bill Gates has a very good, diversified investment portfolio
which bring him insane returns every year. What's even more impressive is that
he only owns around 1% of Microsoft, is not even the CEO and he has
also given away billions of dollars to charity. So he could have being even
richer if not for his charitable donations via his foundation, the Bill and
Melinda Gates foundation. By having a diversified portfolio, Bill Gates can
afford luxury items very comfortably unlike Jeff Bezos who relies on credit from
which also relies on his company's perceived reputation and potential.
Also, Bill Gates can liquidate his holdings in his portfolio much faster and
can come up with even 50 billion dollars within a few months which would not be
possible for Bezos. He also has only 60% of his portfolio in stocks which means
the rest is in cash, bonds, real estate etc. So even if the stock market were
to crash, Bill Gates will still be in a better position than most billionaires.
Takeaway
When it comes to wealth, I
believing diversification is the way to go. By having all your eggs in one
basket aka having one source of income, you are in endangering yourself and
your loved ones. This is because when the one source of income disappears, you
are wrecked financially and cannot cater for your needs. By having a variety of
income streams, you remove the dependency on one source and are in a much
better financial position even if one income source vanishes.
References
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