An average individual boasts of some hard assets, which may comprise their home, vehicle, furniture, etc., and some liquid cash which is often stashed in one or more bank accounts. That is for the average individual. What about billionaires? How much liquid cash do these individuals have?
Most wealthy people are shockingly cash poor. An average billionaire holds around 1% of their total assets in liquid cash-like money. Most of their wealth is thrown into different types of investments.
Are you eager to figure out how much cash billionaires have? Do you think these unique individuals have millions of dollars stored in their accounts or somewhere in their homes? There is only one way to find out.
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How Much Liquid Cash Do Billionaires Have?
Many of us believe that a billionaire like Jeff Bezos has millions or even billions of dollars (in cash) stashed in his bank account. However, as logical as that may sound, it isn’t true. Let’s first look at who a billionaire is.
Who Is a Billionaire?
The name “billionaire” is a popular word we hear often. In fact, some of us have pictures of some role model billionaires resting on our walls. But while the word “billionaire” seems like a household name, I bet only a few people out there understand the real meaning behind this word. If you aren’t sure who a billionaire is, or maybe you are one of those who see billionaires as individuals who have a billion-dollar in their account, here is a terse definition to help you out.
Understanding a Billionaire:
A billionaire is simply an individual who has a net wealth of a billion dollars ($1,000,000,000) or a number followed by nine zeros. This is a thousand times more than a millionaire ($1,000.000). Basically, it means a billionaire is a thousand times richer than a millionaire.
Of course, in my little definition, we used dollars, but this doesn’t apply to billionaires in other countries. Billionaires in other countries are defined by monetary units in currencies like euros, pounds, and others. Thus, an individual who is a billionaire in Eurozone like France or Germany is defined with a net worth of €1 billion or excess, while an individual in the U.K has £1 billion or more.
To calculate an individual’s net worth, simply remove his liabilities from assets. A billionaire’s assets aren’t limited to just cash alone, as some people think. Instead, include cash and liquid investments, personal property like real estate, jewelry, cars, and other vehicles, and furniture. Business interests like tools and commercial properties are also added if the person has a personal stake in a company.
Billionaires consist of a small and a high-class of influential persons, both men, and women, in the world. These unique individuals control huge sums of money, including the power and influence that it comes with.
What Is Liquid Cash?
Billionaires are unique individuals who boast huge wealth, most of which are stored in hard assets like gold, real estate, etc. But, billionaires don’t only store their wealth in hard assets. They need liquid cash to spend daily. Here is a brief definition of it.
Liquid asset, is regarded as cash on hand or an asset that can be quickly converted to cash. An asset that can be quickly turned into cash is just like cash itself, as it can be sold with a minute effect on its value.
Liquid assets or cash are often seen as the same as cash, as their value remains unchanged when sold. Many factors must be present for a liquid asset to be deemed liquid. And what are those factors? Well, first off, the liquid asset must be in an established market, with many keen buyers, and with the ability of ownership to change hands easily.
Unlike hard assets, liquid assets are considered the simplest type of assets adopted by consumers and businesses. Cash on hand is regarded as a liquid asset as it can be easily accessed. Cash is a legal tender that businesses can use to sort out their current liabilities. For instance, the cash in your checking account, savings account, or probably the money market account is regarded as a liquid asset as it can be taken out easily and used to sort out liabilities.
Benefits of Liquid Assets:
Keep Cash Handy: One of the greatest benefits of liquid assets is that they ensure that your cash is accessible whenever you need them. Emergencies come without notice. Investors are always advised to keep some assets in their portfolio, so they have available cash should an emergency arise.
Investing benefits: Holding liquid assets such as money market funds is beneficial for your investment portfolio. That’s not all. These assets also keep your money available for unforeseen circumstances, but one can use them for additional investments. At any period, you can use your assets to make new investments without selling other investments.
Now that you understand the benefits of liquid assets let’s delve into the main purpose of this article.
A typical billionaire doesn’t own many liquid assets as expected of them. The little liquid assets they own are designed for emergencies and typical daily expenses. In fact, based on stat, it is said that billionaire holds around 1% of their entire assets in liquid assets like money because most of their wealth is invested in things like stocks, securities, etc.
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Why Don’t Billionaires Store All Their Money in Liquid Cash?
Normally, we expect a billionaire like Elon Musk, Mark Zuckerberg, or Jeff Bezos to store all their money in cash. We expect them to stash many million dollars in their bank accounts. But, these individuals don’t do that. Why do billionaires don’t store all their money in cash?
Billionaires don’t store all their money in liquid cash due to inflation. Inflation is the bane of it. Thus, billionaires invest their money to outperform inflation.
The wealthy don’t stash all their money in the bank. That said, it makes sense to do likewise to safeguard your money from inflation.
