How can rich people drop all so much money on a daily basis but when they need larger amounts of money, they need to liquidate assets?
Yes, I know that wealth can come from owning assets outside of cash, but how can you spend hundreds of thousands of dollars a month if a their money and wealth is all tied up?
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Imagine you have twenty million dollars. You’re very liquid. First you buy a ten million dollar house. Now you’re less liquid. Then you spend ten million dollars on hookers and cocaine. Now you have no money, but still have the ten million dollar house. You’re not liquid at all. You could restore some liquidity, and afford more hookers and cocaine, by taking out a loan, using your house as collateral.
Maybe don’t use the explanation with an actual five-year-old.
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