Theorhetical wealth? How does being a billionaire work?

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Gates, Bezos, Yankovich, Buffet all have a theorhetical fortune. I assume none of them have a Scrooge McDuck like vault of coins on a hill somewhere. So how do they convert their wealth into purchases. One would assume they have some walking around money. But if they want to buy a speed boat or a pallette of rice-a-roni, do they have to sell stock? How do you convert equity worth billions into everday cash?

In: Economics

3 Answers

Anonymous 0 Comments

So the Bezos method for buying something expensive is to take out a loan against his fortune. A bank is cool with giving him the absolute lowest rate since clearly he’s good for it. So he takes a loan of $100M and buys a yacht, and then he doesn’t owe the 35% tax associated with regular income and he doesn’t owe Cap Gains tax of 20% but he does owe 3% against the loan. From there you decide if you want a higher salary to pay the loan, taxed at 35%, or to sell a small amount of stock, 20% tax, so then he opts to gradually sell stock. This plan works awesome if your stock is growing at like 15-20% annually and the loan is growing at 3%.

https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?amp

Anonymous 0 Comments

You schedule sale of stock based on SEC guidelines and pocket the money. They also likely have other investment portfolios that are more liquid where they can draw money from

Anonymous 0 Comments

They would draw a massive income from the companies they head. Also business and asset managers and accountants that can help them access more cash for larger purchases (houses, real estate, graphics cards, etc)