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10 things billionaires won’t tell you
By Quentin Fottrell | MarketWatch – Mon, Nov 18, 2013 8:40 PM SGT
Bloomberg 1.“We just get richer and richer.” In 2013, the wealth of the world’s billionaires reached a record high — helped by 200 newcomers like Facebook founder Mark Zuckerberg. The 2013 Forbes Billionaires List names 1,426 billionaires with an aggregate net worth of $5.4 trillion, up a whopping 17% from $4.6 trillion last year. And that doesn’t include royalty or, um, dictators. Of those, some 442 make their home in the U.S. (there are 386 in the Asia-Pacific region, 366 in Europe, 129 in the rest of the Americas and 103 in the Middle East and Africa combined, according to Forbes). The average net worth of each U.S. billionaire: $10.8 billion, up from $9.1 billion last year, according to a separate survey released this month by private wealth consultancy Wealth-X and UBS. Meanwhile, the rest of the country’s net worth has actually fallen since the Great Recession — and has yet to recover. Adjusting for inflation, real net worth per U.S. household hovered at $652,449 by the end of June 2013, according to the Federal Reserve, or about 95% of its 2007 level of $684,662. If that seems inordinately high, that’s because the majority of U.S. households carry their net worth in their home. That average also is inflated by, well, millionaires and billionaires: In fact, around half of U.S. households have a net worth of no more than $83,000, a Pew Research Center’s analysis of 2010 Federal Reserve survey found.) And while ordinary Americans have seen their net worth fall since the recession, billionaires saw their net worth rise by over 50% from $3.5 trillion in 2007. Why are billionaires on the rise? “Daily record highs in the financial markets have caused surging net worth for the richest 1%,” says Mark Martiak, a wealth strategist at Premier Financial Advisors in New York. Commercial and residential real estate values have also been rebounding, he says. “Combined with low inflation and low interest rates for borrowing, this big picture presents a favorable backdrop for the wealthy, in spite of higher taxes, stubbornly high unemployment, the potential Fed tapering and wrangling in Washington,” Martiak says. 2.“One million — or 10 — ain’t what it used to be.” In a time when the median price of a home in Manhattan is just over $1 million, according to real-estate website Trulia, experts say that being a millionaire no longer means that you’re rich. It could just as easily mean you own your own a home in New York or San Francisco, or have a vacation home on the Jersey Shore. “The word now doesn’t have as much power,” says Charles Merlot, author of “The Billionaire’s Apprentice: How 21 Billionaires Used Drive, Luck and Risk to Achieve Colossal Success.” “In the eyes of the public, even $10 million is considered at the low end of high-net-worth.” For the global elite, keeping up with the Joneses, Gateses and Buffetts can require, at bare minimum, an eight-figure annual income. The online listing site Jameslist.com, a Craigslist for the super-rich, lists helicopters for a snip at $7 million-plus. (Failing that, one could always quietly take a share in one through a site like FlexJet.) For those who believe a Bentley is too — well, obvious — the fastest and most expensive production car in the world is the $2.4 million Bugatti Veyron Super Sport car. Billionaires who don’t want (or like) their neighbors can check out PrivateIslandsOnline.com,
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Perhaps that should come as no surprise.” says Ben Mezrich. billionaires don’t see millionaires as their equals. 3. the founder of Wal-Mart. In fact.” “The main impetus for them at the very beginning was to meet girls.. denied he ever said that in real life. more than 90% of billionaires are men.com/news/10-things-billionaires-won-t-124.426 people on Forbes’s Billionaires List this year. In 2009. or born lucky? Wai says it’s a bit of both.) Indeed. 53. “I can’t even remember my 20s.“I may be smart. his father was a cab driver. today known as Koch Industries.” (Parker has. which has a collection of hideaways around the world to choose from. And the late Rosalia Mera. “The first trick to becoming a billionaire is being born a millionaire.” Women are making some progress: There are 138 women among the 1.” published in the journal Intelligence. In “Investigating America’s Elite. “A million dollars isn’t cool. recent research suggests. judges.yahoo. his father died when he was eight. those who have worked with billionaires say that. the majority shareholder of the Baltimore Ravens. In 2010.” Billionaire Donald Trump offered to build a $100 million ballroom for the White House in 2011. to be considered rich among their elite. Lynn Tilton. Robson Walton. Sheldon Adelson. who founded the cosmetics giant L’Oréal.. plenty of billionaires were not born with financial advantages. America’s richest man. was self-made: Although she dropped out of school at age 11. A more novel theory for the boys’ club: For some young male billionaires.” 4.10 things billionaires won’t tell you . The richest woman in the world — Liliane Bettencourt. Martiak says. she co-founded the global clothing chain Zara (she died in August).“It’s like Monopoly money. in interviews. is the son of Sam Walton. author of “The Accidental Billionaires” and “Bringing Down the House. he says. “The coolest thing about Mark Zuckerberg and Eduardo Saverin is that they never did it for the money. “This is basically a boys’ club. 91. and son of a successful lawyer — were born into a upper middle-class backgrounds. testosterone may have given them their start.” says author Mezrich.” America’s billionaires tend to also be among its most well-educated.000 companies are held by women — a strikingly small proportion considering that 18% of members of Congress and 30% of U. and was a single mother working 100 hours on Wall Street in her 20s. up from 104 last year. rising through the corporate ranks isn’t the only or even the most common way to become a billionaire. 2 of 5 20/11/2013 12:18 AM . District Court Judges are female. Billionaires and millionaires may sit side-by-side on boards.” she says. the Koch brothers turned the company into the multi-billion dollar conglomerate it is today. founder of private equity firm Patriarch Partners. The father of billionaires David and Charles Koch was Fred C. Most billionaires — including Bill Gates. Russian oligarch Roman Abramovich purchased his latest yacht — the 536-foot-long “Eclipse”— for a reported price of about $1 billion. Duke University psychologist Jonathan Wai found that billionaires are more likely than CEOs. one of the 20 richest women in the world. tells the Mark Zuckerberg character. Stephen Bisciotti.finance. You know what’s cool? A billion dollars. was born in a working-class neighborhood in Boston. The 225-acre Katafanga Island in Fiji in the South Pacific is currently on the market with a price tag of $20 million. 54. a million doesn’t cut it. It turned into a billion dollars. S. granted.” a semi-fictionalized account of the founding of Facebook (FB). senators or House members to have attended colleges with the most rigorous admission standards But were they born smart. Luckily.S. “they were so dark. in the role of Napster founder and early Facebook backer Sean Parker. chairman of Wal-Mart. 80.” 5. who has $30 billion — inherited her fortune from her father. In the movie “The Social Network. CEO of the Las Vegas Sands casino and resort. but that’s nothing compared with what some of the mega-rich have actually spent without blinking. Koch. but I got a head start. Justin Timberlake.Yahoo Singapore Finance http://sg.” which became the sources for “The Social Network. the founder of Wood River Oil and Refining Company. Still. worked his way through school. grew up in the Bronx. considering that just 4% of CEO positions at Fortune 1. but handshakes and smiles aside.
I don’t want a great company with the highest integrity dragged into a public fight because of my divorce proceedings. Many have spent their lives trying to make a profit and doing accounting in their heads. The latest to be named and shamed — and face jail time: Ty Warner.9 billion.” Luckily. the lavish spending is all relative. Saudi prince Alwaleed bin Talal bin Abdul Aziz al-Saud bought an Airbus A380 for $400 million. Many billionaires — Steve Jobs.finance. (Klein is also a MarketWatch RetireMentor) The founders of Twitter likewise became billionaires with their IPO earlier this month. The Securities and Exchange Commission then launched a formal inquiry into Welch’s compensation agreement. The 2003 divorce between former General Electric head Jack Welch and his second wife Jane Welch. according to a survey of the world’s billionaires published by Wealth-X earlier this month.yahoo. but incidents involving billionaires certainly garner more media attention — presumably because of the vast sums involved.Yahoo Singapore Finance http://sg.” If you want to be a billionaire and you’re starting from scratch. “In this environment. Calif. don’t bet on the stock market. “But then they’ll go buy a jet for $50 million. District Court in Chicago in October. author of books about biographies of several billionaires. you’re a massive superstar. says Robert Klein. “I apologize for my conduct.. Mark Zuckerberg — instead made their fortunes in start-ups. some advisers say. “A lot of billionaires try to avoid paying taxes. an individual who happens to invest at the bottom of the market and sell at the top can do quite well. real estate mogul Stan Kroenke bought a 240. That’s far lower than the U.001% of her wealth. “What scares us? Divorce lawyers. 59.10 things billionaires won’t tell you . but she’s worth an estimated $2. In general. And in 2012. divorce rate: Some 40% to 50% of marriages overall end in divorce. is a prime example: Divorce paperwork filed in Connecticut revealed the couple’s high (and previously undisclosed) standard of living. But in some cases.S. Here’s another way to look at it: If you earned 15% a year on your investments — an astronomical benchmark that almost nobody has consistently hit — you’d still have to start with about $65 million in order to wind up with $1 billion after 20 years.” Warner told a U. publicized the details. Billionaire divorces can cost hundreds of millions of dollars and exact a heavy toll on the couple’s privacy. Bill Gates. was reportedly recently in the market for a $38. divorce is relatively rare among the moneyed set.“You say evading.S.” says David Friedman of Wealth-X. “most billionaires can actually be very cheap.” But at that rate.S.” 6. focusing on the generous benefits Welch received as a retired GE exec.” Welch wrote in a column for The Wall Street Journal at the time. she says. and Welch voluntarily gave up his GE retirement package.000 Tom Ford handbag. according to Forbes — so the handbag would cost just 0. Sure. “Wall Street becomes far more important later on when you’re preserving their wealth. CEO of Ty.” he says. “if you beat stock indexes by 1% consistently over 20 years.” There’s no data on whether the ultrawealthy shirk their responsibility to pay taxes more often than the average citizen. “They’ll ask for the receipt in a restaurant and argue over 50 cents. only 8% are divorced. it’ll be a long time before the average investor becomes a billionaire. the maker of stuffed Beanie Babies and worth an estimated $2. explaining his decision. Mexican businessman David Martinez bought a Jackson Pollock classic drip painting from music producer David Geffen for $140 million. In 2006. 69. founder and president of Retirement Income Center.com/news/10-things-billionaires-won-t-124. Of the 84% of billionaires who are married. and major newspapers throughout the U. valued at $2. “You’re far more likely to become a billionaire in Silicon Valley than on Wall Street”.000-acre Montana ranch for more than $132 million. says Janet Lowe.“We didn’t get rich investing in stocks..” says Friedman of Wealth-X. according to the National Marriage Project at the University of Virginia. including Berkshire Hathaway’s (BRK-A) Charlie Munger and Google co-founders Larry Page and Sergey Brin. 7.” 8. a retirement and income planning firm in Newport Beach. according to Forbes.” says Martin Fridson. and perhaps not coincidentally. we say avoiding. “I made a 3 of 5 20/11/2013 12:18 AM . Indeed.5 million a year.6 billion. says wealth strategist Martiak. author of “How to Be a Billionaire: Proven Strategies From the Titans of Wealth. Oprah Winfrey.
after Michael began writing about the family in a blog called “5 Days In Connecticut. says she denies all wrongdoing and. China buzz For long-term care. 9. therefore.”) Others who have made the pledge thus far include hotelier Barron Hilton. I’m fully responsible. Nor is it always the kids suing the parents: Financier T.4 million moderate income tax payers. Joan.’” More From MarketWatch Bitcoin flies above $600 on hopes of D. author of “How to be a Billionaire: Proven Strategies from the Titans of Wealth.500 taxpayers — pay a lower tax rate than 10.) Not all family disputes are about money. At least 30 billionaires have chosen to sign the “Giving Pledge. an attorney representing Michael Pickens. libel. more billionaires are taking a slightly different tack. which some experts say will prevent a power struggle among his three adopted children after he’s gone. “no-one is deliberately or intentionally avoiding paying tax. you're on your own 4 of 5 20/11/2013 12:18 AM . since most of their income is from investments and. a government agency that analyzes public policy data. mistake.yahoo.” Most billionaires have traditionally left their fortune to their offspring or brought them into the family business.. “My family hates me. according to a 2012 report by the Congressional Research Service. He once told a television interviewer: “I want to give my kids just enough so that they would feel that they could do anything. “King Lear taught me everything I know. however.” He owes the government $53.” an initiative started in 2009 to encourage the ultrawealthy to give away half their wealth. their legacy becomes more important than their money. Citigroup founder Sandy Weill and his wife.C. (Gina Rinehart’s law firm. financier Ronald Perelman. (Warren Buffett has pledged to give away 99% of his wealth. one of the largest offshore-account penalties ever. For many billionaires. in a statement released to the press. I set out to do good. Lucas.Yahoo Singapore Finance http://sg. 59. said she’s offering to give up her role as trustee to end the litigation. The line certainly gets blurred between illegal tax evasion and lawful tax avoidance. 10. 37. 69. “The Apprentice. In fact. taxed at lower rates than wages and salary. Around 25% of all millionaires — 94.” The very wealthy — billionaires included — also have the opportunity to pay a far smaller percentage of their income in taxes. Martiak says. Australia’s richest woman — whose children. says Martin Fridson. Corrs Chambers Westgarth. are suing her. For the most part.” Although they obviously didn’t become billionaires by accident. hedge-fund managers Julian Robertson Jr. and Jim Simons. Case in point: Three of Donald Trump’s children work in the family business and even appear on his reality TV show. says the case is being considered by Dallas County Court and no decision had been reached.. John Hancock.” Collin Porterfield.10 things billionaires won’t tell you .finance. Boone Pickens sued his son Michael in February for alleged defamation.6 million for failing to file a report on foreign financial accounts.” Spare a thought for Gina Rinehart.” These days. blessing. he says many billionaires mellow with age: “They’ll usually tell you. private-equity financier David Rubenstein and “Star Wars” creator George Lucas. invasion of privacy. and Bianca Rinehart. ‘I never set out to be a billionaire. but not so much that they would feel like doing nothing. intentional infliction of distress and harmful access by computer. loves my money.com/news/10-things-billionaires-won-t-124. 36. banker David Rockefeller. They allege that she engaged in serious misconduct as trustee of the family’s multibilliondollar trust by trying to delay the date when the trust’s beneficiaries — her four children — could access their money. however. also sold off the bulk of his business empire last year.
Yahoo Singapore Finance http://sg. though doubts remain 5 of 5 20/11/2013 12:18 AM .yahoo.. China reforms get market cheers.finance.com/news/10-things-billionaires-won-t-124..10 things billionaires won’t tell you .