Net worth and what it really means

Jeff Bezos, the founder and CEO of Amazon, is the richest man alive, with an estimated net worth of $163 billion.

Bill Gates is 2nd place with $95 billion.

These are just the top 2 richest people alive. There are definitely more: Mark Zuckerberg, Warren Buffett, Larry Ellison, the Google guys, the Wal-Mart family, and more.

If you’re really curious, like I usually am, you can view the Forbes billionaire list here.

But what does net worth actually mean?

Photo credit

I can tell you what it does not mean; they do not have all that money in their checking account.

The super wealthy have the vast majority of their money in stocks in their own company.

For instance, Mark Zuckerberg, founder and CEO of Facebook, has a net worth of about $62 billion. Where is his $62 billion? In the shares he owns in Facebook.

Zuck owns about 14 million class A shares, and over 440 million class B shares. With a price per share around $162 (at the time of this writing), that’s a CRAP TON of money!

These people, when they feel they need some money, sell some of their shares.

Jeff Bezos, last November, sold 1 million of his shares in Amazon for a whopping $1.1 billion. Must be nice!

So, what else do billionaires spend their money on?

They invest. It’s as simple as that.

Billionaires do not become filthy rich by spending frivilously. They certainly can if they want now, but they never would have gotten to be that rich by wasting money.

They invest in real estate, bonds, other companies, or they buy other companies out right. From these investments, they make even more money.

They do not keep very much of their wealth in checking and savings accounts. As I’ve said on my blog, savings accounts are a waste of money; they don’t even keep up with inflation.

In 2011, a savings account receipt in the Hamptons was found, and the balance was unreal; $99.8 million.

David Tepper photo credit

David Tepper, billionaire hedge fund manager, was asked if the receipt was his. When asked, Tepper replied “I would never do something as irresponsible as leaving $100 million in a savings account.”

I couldn’t agree more! I don’t keep the majority of my money in a savings account either. I don’t have nearly $100 million, but it seems to me that bonds would be a MUCH wiser choice.

Anyways, the point is, net worth is total sum. It does not mean that they have that much in cold hard cash. Not even close.

They invest. I invest. The reason we invest is simple: because our money will make money… it will work for us.



Categories: Financial Health, Investing

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