As far as I understand it, a billionaire’s wealth is wrapped up in stock, which is used as collateral to borrow money to actually spend. So how do they pay off those loans? With other loans? Loans all the way down?
In: Economics
A billionaire may have wealth in form of stock, art and other collectibles, cash and cash equivalents, money market accounts, CDs, bonds, bullion, commodities, real estate, thoroughbreds, airplanes and yachts, etc. etc. etc. Some of it relatively liquid, other harder to convert.
There’s no one way the wealth is held and every billionaire will have a different mix of assets. Some of it may be financed, some of it may be pledged as collateral on loans. They aren’t really a billionaire unless the sum total of the assets exceeds the sum total of the liabilities by at least 1 Billion dollars.
If they’re borrowing off the assets to finance their life style then they pay off the loans as they come due with other assets (likely cash on hand). Or they have to sell other assets to cover the debt. But if their debts exceed the assets, then they’re not really a billionaire at all.
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