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?
In: 1
A combination of dividends, interest, and loans.
So you may not be liquid, but your investment holdings may pay regular dividends (in the case of stocks) or interest (in the case of bonds). Also when you have a very high asset wealth, a bank is more than willing to lend you money, as they can be assured the debt can be paid off by liquidating assets in a worst case scenario. A good example of that is the American Express Gold and higher card. There’s technically no limit to spending on the card and you’re only approved to get one if you are able to show that you’d be able to pay off the balance at the end of the month, along with the annual fee.
So the short answer is: They know you’re good for it.
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