Skip to main content

Different Strokes: Why Bill Gates is a better billionaire than Jeff Bezos

 


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

How Bill Gates tramples his fellow billionaires

Ranks of Global Billionaires

Comments