Billionaires’ ways of managing their finances are vastly different from ordinary people. While most ordinary families choose savings accounts as their primary financial planning method, billionaires generally consider putting money into a savings account a waste.
In most Western countries, income from savings accounts is subject to taxation. Additionally, after factoring in inflation and tax considerations, the actual returns on savings accounts are usually negative. Because billionaires typically do not care about liquidity and do not need traditional emergency funds, opening a savings account does not make much sense for the super wealthy.
So where do billionaires put their money? Here are some common choices compiled by the financial website Gobankingrate.
One of the most favored investment vehicles for billionaires may be stocks of their own companies. In fact, the path to becoming a billionaire almost entirely lies in building a world-class company. While some people can become millionaires by investing in stocks and other market investments, reaching the tens of billions wealth level typically requires founding or owning a large enterprise.
According to the Forbes billionaires list, the top ten billionaires have accumulated immense wealth through founding companies or playing a significant role in the development of the company:
– Elon Musk: Tesla, SpaceX
– Mark Zuckerberg: Meta Platforms
– Jeff Bezos: Amazon
– Larry Ellison: Oracle
– Bernard Arnault: LVMH Moët Hennessy – Louis Vuitton
– Warren Buffett: Berkshire Hathaway
– Larry Page: Google
– Sergey Brin: Google
– Amancio Ortega: Zara
– Steve Ballmer: Microsoft
Real estate is a popular investment among billionaires for various reasons. Firstly, it is a tangible asset that remains visible even during economic turmoil. While prices may fluctuate, people always need a place to live and work, giving real estate intrinsic value.
Of course, billionaires tend to invest in the highest quality land and properties.
Residential and commercial real estate can also provide substantial returns. In addition to being a relatively predictable source of rental income, real estate offers opportunities for lucrative leverage returns since investors only need to put in a small portion of the property’s value to own it. Perhaps most importantly, real estate provides numerous tax benefits, which billionaires have always been attentive to.
Private equity refers to holding stocks of companies that are not traded on public markets (like the New York Stock Exchange). While individual investors are increasingly entering this mysterious market, it has traditionally been dominated by the super wealthy.
According to data from the membership organization TIGER21 targeting ultra-high-net-worth investors, private equity was the preferred asset of its members in 2024, accounting for 28%. This percentage exceeded real estate (26%), which ranked second.
According to Federal Reserve data, as of 2022, the wealthiest 10% of Americans hold 93% of the total value of the U.S. stock market.
Of course, a portion of this stock market wealth is still closely related to the ownership of companies held by most billionaires. For example, according to Reuters, publicly listed stocks of Berkshire Hathaway accounted for approximately 99.5% of Warren Buffett’s total wealth.