Money Advice

Millionaires are share protective and they guard their shares like hawks, which keeps them from financially accelerating upward at a faster pace. Jeff Bezos owns approximately 12.7% of Amazon Elon Musk owns approximately 13% of Tesla Bernard Arnault owns approximately 46% of LVMH Warren Buffet owns approximately 16% of Berkshire Hathaway Larry Ellison owns approximately 35% of Oracle You get the point - owning 10% of a multi-billion dollar business is more lucrative than owning 100% of a $10 million dollar business!

Real estate is the "dumb" millionaires game. You can become a millionaire in real estate even without the brain power to do anything else. Ask any millionaire and they will tell you that at least 35 - 50% of their wealth is tied up in real estate. Ask any billionaire and they will tell you that at least 70% of their wealth is tied up in business interest and private equity. The most productive way to increase your wealth is to own a business, blow it up, and use the funds to buy pieces of other businesses. Then do it over again! Through Private Equity you can buy and sell pieces of any business you can get your hands on.

Through several jobs (doctors, lawyers, engineers, tech, etc.) you can earn you way to $1 million dollars - just put in the sweat and stack your checks for many years. But you will never get to a billion dollars the same way. Here is how to scale up to a billion dollars using other people's money: Step 1: Go to your family, friends, angel investors, and banks with a really good idea; present a solid business plan on how you will do all the work, and offer 20% of your company for $100,000. Your business is now valued at $500,000, which you still own 80% of. Your net worth is now $400,000. Step 2: You and your team get to work, use the $100,000 to grow your business to $1 million dollars in annual sales. Step 3: After $1 million dollars in annual sales, get external investors to buy an additional 20% of your company, this time at a $10 million dollar valuation. You now have $2 million dollars cash and a net worth of $6 million dollars. You still own 60% of your business. Step 4: Use the $2 million dollars to build sales from $1 million dollars annually to $10 million dollars annually. Step 5: After $10 million dollars in annual sales, you sell another 20% of your company, this time at a $100 million dollar valuation. You now have $20 million dollars cash and your net worth is now $40 million dollars. You still own 40% of your company. Step 6: You use the $20 million dollars to scale your business. You either develop a new product to sell or develop products for other companies, and hire energetic sales people to sell these products. This is also a good time to invest in or buy other companies. Step 7: File for an IPO (Initial Public Offering) and float 10% of the company's remaining shares on the public market at a $1 billion dollar company valuation. You have $100 million dollars in cash and a net worth of $300 million dollars. You still own 30% of your company. Step 8: File an additional IPO floating 10% more of your company, this time at a $10 billion dollar valuation. You raise $1 billion dollars in cash, which increases your net worth to $2 billion dollars. You still own 20% of your company.

You must understand that every business buys low and sell high to optimize growing your business. It does not matter is you are an Amazon that has small mark-up margins but hundreds of thousands to millions of transaction a day or Tesla that has high mark-ups and a consistent flow of loyal transactions. Fundamentally, it refers to the number of transactions you do through product mark-up and business scaling. A business only grows in one of three ways: (a) charge more and maintain the same number of transactions; (b) charge the same and increase the number of transactions - offering same product in different locations; (c) charge more and increase the number of transactions - luxury brands. Billionaires know profit is made at the point of purchase, not at the point of sale. Once you move into a different bracket of scale you increase your bargaining power of negotiating how low you can buy.

Cash loses 5 - 10% of its value annually due to inflation; historically, blue chip art consistently outperform the S&P 500. Art can be purchased and leased to museums or stored as a bargaining chip - it is much easier to move $500 million dollars in art than 5000 pounds of gold. More than 62% of high-net-worth investors allocate 30% or more of their investment portfolio to art and collectables.

Stocks work well when you have a large time horizon and a lot of money to start investing with.

New billionaires brings with them those who believed in their vision and financially supported their business from the beginning and throughout growth.

Average people think rich people are hording resources and swimming in a vault full of cash and gold coins. Most billionaires, in reality, are simply paper billionaires. This means the shares they own in a company or companies is worth $1 billion dollars or more. When billionaires need money they are smart enough to borrow it using their shares in other companies as collateral. They never sell assets and they use the borrowed money (debt) to buy other money generating assets to increase their wealth. You do not pay taxes on debt!

Poor people look at life in terms of days, the middle class in terms of months, the upper class in terms of quarters, the rich in terms of years, and the super rich in terms of decades. Only sit on cash for emergencies and to buy in a crisis (recession), which generally occurs every decade. Having cash on hand during a crisis allows you to buy income generating assets at 50 - 75% discounts. Billionaires see crises as Black Friday sales!

No billionaire is self-made. To have time and the mental space to focus on growing your business you must find, rely on, and trust the expertise of others (CEOs, managers, lawyers, accountants, etc,) to get you to the next level. These people keep you focused and provide clarity of thought.

It takes the same amount of effort to convince one person to buy something as it does to convince a business to buy something. It is simply one sale; however, the difference in income is substantial. You can earn 10 - 50 times more than you do, you are just deploying your efforts on the wrong thing.

When you start from the bottom it takes a lot of work to achieve financial success... many of today's billionaires started with a safety net - rich parents. You are not starting at the bottom either; more than 3 billion people around the world do not have internet access or a phone. You obviously have a device to use to access all the knowledge in the world at anytime.

All electronic appliances use cobalt, which is mined for production by children at an average of $2 dollars a day. Clothes use cotton - you get the point?

Life generally grants everyone one wish but you have to figure out what that one wish is and be absolutely obsessed with that one wish nonstop for decades. Can you sacrifice family, friends, your personal life, etc.?

Senior executives make a small amount of high-value decisions that have major upsides, which reward you on the percent of times you are right about the decision. For example, Warren Buffett is considered the greatest investor in the world because of his ability to consistently make high-level financial decisions that generate a lot of money for investors. When you systematically improve your decision-making skills, the higher you will climb and the higher the stakes are with every decision you make. Persuasion is the most valuable skill there is, which requires clear communications to get people to trust you enough to believe in you, join you, and invest in you and your company. That's why the wealthiest 10% of Americans own more than 89% of all the stocks in the United States. The bottom 90% barely have any investable assets.