Becoming a billionaire is one thing that is very easy, you do not have to be a wizard to be one, all you need to do is to create a limited liability company with 20 shares, hold 18 of it and sell the remaining 2 for 50 million dollars each and yes, you are a billionaire but you might still be poor. Does this mean not all billionaires are billionaires with money? In everything there are hierarchy, we do not just have the poor, middle class and the rich, but we also have the hierarchies in each of this echelon of finance. So today I will be looking at who is truly wealthy and who are the true billionaires.
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Just like the lower, middle, and higher class exist in stratum so does it exist in billionaire status. We have the lower level billionaires, the middle-class billionaires, and the higher-class billionaires.
Lower class billionaires
One thing we need to understand is that all billionaires have billions in paper and that is their net worth. A lot of lower-class billionaires are people who own private limited companies which are not listed on exchanges. These billionaires are rich in paper and do have access to liquidity at any time. If a privately owned company needs money now, they would have to get a list of investors privately who would buy equity for cash which means the company doesn’t have liquidity at all, so the billionaires do not have excess money to buy those expensive things. They rely on returns the company makes at the end of the year. Also, although some of this company do not make money at all, say companies like snapchat which runs at a loss but the owners of the company who are billionaires on paper enjoy bank levity as the bank loan them money with the believe that they would go public or sell their company in the future. This money isn’t to be paid in a hurry and these billionaires can use this money to buy private jets and many other things.
Middle Class Billionaires
These billionaires have their companies listed on the stock exchange market and have access to funds (liquidity). These billionaires have their fortune tied to a company in which a drop in their company shares affect their worth. Let’s say Facebook’s Mark Zuckerberg and Amazon’s Jeff Bezos fall under this category (did you say Jeff Bezos?) Yes, Jeff’s wealth is tied around amazon and it is visible that his wealth increased up to $180 billion due to the rise in Amazon’s shares with the effect of the pandemic. Billionaires like this cash out money from selling a part of their ownership/shares in the company they own (Jeff Bezos is a very good example as he sell $2 billion shares yearly and invest this large sum into a company called blue origin and for every other things he need). These billionaires also tend to have political good will and at such enjoy political influences.
Upper Class Billionaire
Let’s take Bill Gates for instance, started with Microsoft but currently the chairman of Bill and Melinda Gates foundation. Unlike the Middle-class billionaires, Microsoft only hold very little space in his portfolio. He has invested in other companies which gives him returns on a yearly basis. Companies like Berkshire Hathaway, Caterpillar, Walmart, FedEx, and many other companies. Upper Class billionaires are people who invest in a lot of companies with the billions they made. This people do not depend solely on one company but rather they depend on diversified wealth. People like Warren Buffet of Berkshire Hathaway, Larry Ellison of oracle and many more of this people.
Conclusion
Do not mistake the elite billionaires to the business billionaires, this people are there enjoying linage wealth, in most cases, they oversee the country itself. Which of this ranks do you think have the money and are wealthy?