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Billionaires amass more through inheritance than wealth creation, says UBS

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Re: Billionaires amass more through inheritance than wealth creation, says UBS

#71

Post by Zambyte »

SketchySeaBeast wrote: post #46
WXLCKNO wrote: post #22

Earlier quoted context omitted.

Being worth 50 million puts you in the ultra high net worth category (>30M$) and you live an incredible lifestyle obviously. But your entire net worth is 5% yearly interest on a billion dollars. It's hard to imagine for regular people just how far a billion dollars is, you're essentially royalty at that point as far access to anything in life is concerned.

Yes, by the numbers million vs billion is massive, yes, but for quality of life and for worrying about monetary things? You no longer need to be concerned about food or any type of shelter. It's a matter of the size of yacht you can buy.

As someone in my 20s, I couldn't even retire with $1m. On the other hand, I could live off the interest alone in a savings account with $1b.

(Obviously putting $1b entirely into a savings account is a terrible idea, just making a point)

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#72

Post by zozbot234 »

IAmNotACellist wrote: post #33

And yet 70% of generational wealth is gone by the 2nd generation.

The thing about accumulated wealth is that the moment you spend it down, that chunk of it is gone forever and not coming back - it's very different from having a high income, which can support continued levels of spending over time. So it takes very cautious, culturally-ingrained attitudes to pass down such wealth for many generations. It becomes more of a cultural symbol or totem than anything really tangible at that point.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#74

Post by SketchySeaBeast »

raincom wrote: post #67
SketchySeaBeast wrote: post #7

Earlier quoted context omitted.

Assuming we're not talking "I have a retirement plan and a house so my net-worth is over a million" type of millionaire, isn't passing oneself off as a multi-millionaire instead of a billionaire a distinction without a difference? I guess I don't run in those circles, but it's still fabulous wealth either way.

Yes, there is a psychological difference. Super wealthy have hard time trusting people including their family, friends, etc. Some of them even suffer from paranoia. Just a couple of bad experiences are enough for them to become like that. For ordinary mortals like us, we just write off our bad experiences with other people as natural, not some extraordinary. Being lied to, being backstabbed, lying, backstabbing, coll…

But you said: "One is super, super secretive, who passes off as a multi millionaire."

To say they "pass themselves off as" means there is a visible difference in either what they own or how they act. What does that look like? Are you saying they pretend to trust? How is that apparent? I can't figure out what the obvious visible difference would be.

If a millionaire passes themselves off as someone with much less wealth they'll drive an old Corolla instead of a Mercedes. What's that equivalent here?

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#75

Post by Clent »

jshen wrote: post #52
IAmNotACellist wrote: post #33

And yet 70% of generational wealth is gone by the 2nd generation.

I was wondering the same thing. I've heard conflicting things and I'm not sure how to make sense of that.

I would imagine it has a lot to do with how wealthy the family was. It's easier for a single generation to waste 50 million than it will be for them to waste 50 billion.

Family sizes are also much smaller so the split of the inheritance will result in larger starting wealth for each generation.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#76

Post by TheOtherHobbes »

SketchySeaBeast wrote: post #46
WXLCKNO wrote: post #22

Earlier quoted context omitted.

Being worth 50 million puts you in the ultra high net worth category (>30M$) and you live an incredible lifestyle obviously. But your entire net worth is 5% yearly interest on a billion dollars. It's hard to imagine for regular people just how far a billion dollars is, you're essentially royalty at that point as far access to anything in life is concerned.

Yes, by the numbers million vs billion is massive, yes, but for quality of life and for worrying about monetary things? You no longer need to be concerned about food or any type of shelter. It's a matter of the size of yacht you can buy.

Or more realistically, the matter of the politicians and media narratives you can buy.

For $50 million a year you can run a good few think tanks and make a good few campaign donations.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#77

Post by pmorici »

SketchySeaBeast wrote: post #7
raincom wrote: post #6

There are more secret billionaires, who don't appear on the billionaires list. I know of two such billionaires. One is super, super secretive, who passes off as a multi millionaire. There are special trusts that billionaires make use of. Treat a trust like a corporation, with its own independent existence. Such trusts can be set up for multiple generations: these trusts (corporations) are run by professionals, while…

Assuming we're not talking "I have a retirement plan and a house so my net-worth is over a million" type of millionaire, isn't passing oneself off as a multi-millionaire instead of a billionaire a distinction without a difference? I guess I don't run in those circles, but it's still fabulous wealth either way.

If you think about it in terms of what kind of income you would make off interest of ~3% of the principal it’s easier to understand the difference between someone with 5 million vs say 50 and 500 million.

It’s the difference between $150k, $1.5 million, and $15 million dollars in yearly income. At 5 million you can decide to not work but you are only really able to afford an upper middle class lifestyle. Depending on where you lived that might be a working class income these days. So there is a massive difference across the spectrum of multi-millionaires.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#78

Post by brewdad »

teachrdan wrote: post #24
SketchySeaBeast wrote: post #7

Earlier quoted context omitted.

Assuming we're not talking "I have a retirement plan and a house so my net-worth is over a million" type of millionaire, isn't passing oneself off as a multi-millionaire instead of a billionaire a distinction without a difference? I guess I don't run in those circles, but it's still fabulous wealth either way.

You might not have to worry about your or your kids getting kidnapped if you're "only" a millionaire. There are probably other security considerations, too.

If you are "only" a millionaire in a HCOL area, you might still have to worry about crimes against your children. However, they will be random crimes that occur within the city you live rather than targeted crimes.

I have a friend living overseas. His children go to school with a Russian oligarchs kids. Visiting the oligarch's home for a birthday party was wild.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#79

Post by SketchySeaBeast »

Zambyte wrote: post #71
SketchySeaBeast wrote: post #46

Earlier quoted context omitted.

Yes, by the numbers million vs billion is massive, yes, but for quality of life and for worrying about monetary things? You no longer need to be concerned about food or any type of shelter. It's a matter of the size of yacht you can buy.

As someone in my 20s, I couldn't even retire with $1m. On the other hand, I could live off the interest alone in a savings account with $1b. (Obviously putting $1b entirely into a savings account is a terrible idea, just making a point)

And that's why I drew a distinction between the "owning a home and having a retirement plan" millionaire and the truly wealthy multimillionaire sort.

Re: Billionaires amass more through inheritance than wealth creation, says UBS

#80

Post by [deleted] »

eschulz wrote: post #57
IAmNotACellist wrote: post #33

And yet 70% of generational wealth is gone by the 2nd generation.

How is generational wealth defined in that statistic? I know many people who had parents whom I would consider wealthy, but the kids don't make as much and the family are taken down a notch as the kids reach middle age. However, these "wealthy" people were doctors or lawyers, they did well and probably were in the top 2% of earners in their prime, but they were never worth many tens of millions. On the other hand, I…

[deleted]
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