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Companies and Billionaires

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Re: Companies and Billionaires

#101

Post by whamlastxmas »

dwaltrip wrote: post #36
chollida1 wrote: post #12

Earlier quoted context omitted.

Well if you are asking where did their initial wealth come from, you are correct, it came from oil. But keep in mind that they have more than doubled their net worth in the past 8 years. And in those 8 years it was a diversified portfolio that more than doubled their wealth, so given that more than half their net worth was accumulated with a diversified company I can see where Forbes is coming from. http://www.huffin…

For those who are wondering (I was), doubling your money in 8 years is about an average return of 9%. So pretty solid, but not absurd. Although I imagine such returns, with acceptable risk levels, become harder to find when you are dealing with 11-figures.

It's actually been really quite easy for the past decade - just buy real estate. It's very expensive, easy to sink billions into, and over the past 8 years you'd be easily doubling your money on a lot of it.

Re: Companies and Billionaires

#102

Post by pc86 »

gambiting wrote: post #98
pc86 wrote: post #96

Earlier quoted context omitted.

Not a personal finance discussion but tying up large amounts of cash in a depreciating asset is almost always the worst possible use of it.

Sure, but if you like cars and want a brand new one, then it doesn't really matter if it's a bad or a good decision, does it? Just like buying a new phone every year is a "bad" financial decision, but it doesn't matter when that's how you want to spend your money.

What I meant was you can usually finance it and save money. There are no additional incentives for cash buyers, while you can often get incentives to finance and sub-inflation rates or even get additional incentives to finances at a higher rate.

Re: Companies and Billionaires

#103

Post by ChuckMcM »

TheAceOfHearts wrote: post #52
ChuckMcM wrote: post #27

Earlier quoted context omitted.

There are a couple of ways (disclosure, I am not a billionaire :-)) First, nobody really needs a billion dollars in "cash" it just doesn't make sense as "cash" deposits pay a below inflation rate return in most places (meaning it loses its "value" over time) and even a negative interest rate in some places. Second, it isn't like there is a "fixed amount of money" in the world and if someone has all of it, everyone el…

Somewhat related, if you or someone else knows: is there any special process for transferring or handling large amounts of money? For example, if you're buying a $5m private jet, how would you pay for it? A regular check or bank transfer? Also, do the banks keep any security checks in place? e.g. If I had $10m and there was a request to transfer out $5m, I'd definitely like the bank to run it by me.

There isn't anything different really different in the transfer, as both the buyer and the seller have their own banks, the buyer tells his bank to send the funds to the seller's bank, it does, and the seller hands him the jet. Bank to bank transfers can easily be 10's of millions and hundreds of millions per transfer.

As for security, once you get to a couple of hundred thousand dollars in a bank they will generally assign you your own account manager and you can work out security restrictions with them. Generally you won't be doing a lot of "online banking" with those accounts but I could imagine people do. If you have a lot of money they probably would call your accountant to verify the transfer prior to enacting it if it didn't come directly from them.

Re: Companies and Billionaires

#104

Post by Retric »

harryh wrote: post #100
Retric wrote: post #99

Earlier quoted context omitted.

You only need to pay capital gains when you sell an asset. As to deferring if you defer and save 10% then next year defer and save 10% of that it's a net reduction of 0.9 * 0.9 and every year you defer is another * 0.9. If nothing else inflation makes deferring tax loads very attractive.

It's true that you can somewhat increase your overall return by deferring capital gains taxes because you get to hold on to the assets you would have paid in taxes longer and those assets can earn a return for you (this is why certain types of tax advantaged retirement accounts are nice). But I think you are significantly overstating the potential gains when you say that you can save 10% a year. For example let's say…

What tax rate does it take before: (1000) * (1 + 0.08 * (1-x)) ^ 30 = $8,069.6.

Plug some numbers in and it's ~9.9% effective tax rate not 15%. Extend that from 30 to 300 years and that % keeps dropping.

The numbers are even lower if that initial 1000$ was profit not principle.

Re: Companies and Billionaires

#105

Post by charlesdm »

asib wrote: post #92
rantanplan wrote: post #91

Earlier quoted context omitted.

> What makes the system great.. Excessive capital accumulation is what makes this system great? Do I read that correctly?

Perhaps charlesdm meant that what makes capitalism great is the freedom to accumulate capital, but the fact that this also allows excessive accumulation is a flaw.

^ Exactly what I meant.

Re: Companies and Billionaires

#107

Post by Loic »

rjsw wrote: post #68
Loic wrote: post #66

Earlier quoted context omitted.

You do not need to go the private banking way to have such level of service. I am living in Germany at the moment, I have an account in a Sparkasse (A savings bank). As I needed to buy a car, I informed my account manager that I would buy one, gave her the bank account information of the car dealer and told her that if everything is in order, I would call and ask her to perform an "instant" money transfer. Just went…

I think there is a bit of a difference between buying a car and buying a jet. I bought a car last year and just paid for it using my chip-and-pin debit card, my bank told me that they can identify accounts for car dealers and don't question large payments to them.

The car handlers in Germany do not allow that for large amount of money. You can authorize a transfer without limits with your card (Lastschriftverfahren), but the handler will not have the money directly so he cannot be sure he will be able to pull the money out of your account. They want money in an irrevocable way on their account, which I understand.
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