Facts on Billionaires -- And How to Become One

The following is courtesy of Marotta Asset Management and gives some facts on billionaires and thoughts on how to become one:

There are 946 billionaires in the world according to a recent survey. Half are in one country, the United States of America! The others are scattered throughout 53 other countries. Because of the surging world economy, 195 newcomers were added to the list last year and only 32 dropped out. Learning how billionaires amass their wealth may expand your financial horizons and possibly stimulate some ideas that could lead to your name being added in the future.

Topping the list for the past thirteen years is Microsoft founder, Bill Gates, the richest person in the world with $56 billion. Investor Warren Buffet remains in second place with $52 billion. They are followed by three foreigners: Mexican telecom executive Carlos Slim Helu; Swedish Ingvar Kamprad, the founder of the Ikea stores; and Indian steel magnate Lakshmi Mittal

Germany is the next country with 55 billionaires, but probably not for long. Russia with 53 is moving up fast having been freed from the shackles of communism and benefiting from rising world oil prices. In fourth place is the "emerging-market" country of India with 36 billionaires overtaking the "mature" economies of Japan and the U.K.

How does one become a billionaire? If you are lucky, you are born into the right family. The fifteenth richest person in the world Karl Albrecht ($20 billion) inherited his mother's corner grocery store and grew it into the giant supermarket chain Aldi. In the U.S., he owns the fast-growing Trader Joes gourmet food shops.

Do what you're good at, work smart, invest wisely and you too may be pleasantly surprised.

If you are a "geek" in college, start a business in your dormitory. That's what two billionaires did: Larry Page and Sergey Brin. They were graduate students at Stanford University when they conceived the idea that has become the most popular computer internet search engine -- Google. When the company went public in 2005, they were each worth $7 billion. Now each is worth double that: $16 billion. Earlier, Michael Dell started his business while a student at the University of Texas.

Devise a method to sell good products at the lowest cost. That's what Sam Walton did by starting Wal-Mart. His five heirs are each worth about $17 billion. If Papa Sam were still alive, he would easily be the richest man in the world with $85 billion. Sam was a smart man who had six basic rules for his business: think small, communicate, keep your ear to the ground, push responsibility and authority down, force ideas to bubble up and fight bureaucracy.

Is it possible to get rich while you are on welfare? Well, one single mother in England did just that. Billionaire Joanne Kathleen Rowling started writing stories about "Harry Potter" while on "the dole" during the time her child was sleeping.

Is it possible to get rich collecting waste paper? Yan Cheung, China's richest woman with $2.4 billion did just that. The waste paper she collects in the US goes to China to be made into cardboard that then brings back to us the goods we buy from China.

How does one get rich? We analyzed the top fifty billionaires in the United States and found that most of them gained that stature by starting their own business. The next best (and easiest) way to become a billionaire is to have billionaire parents and inherit wealth. The third best way is to entertain people and be in the media business. Fourth, be a good investor (common stocks earn an average of 11 percent annually and at that rate you can double your money every six and a half years). Buying and owning real estate is the fifth best way as it earns an average of eight percent annually, and at that rate you can double your wealth every nine years.

Is a billion dollars a lot of money? Think of it this way. Just to COUNT to a billion would take over 32 years. The wealthiest people today are not like the "robber barons" of a century ago. Most are honest, good citizens, who worked hard to create their wealth, but also did well for society in general. Eventually, most of the wealth is gifted to charity.

Bill Gates, the wealthiest person, and his wife Melinda, set up the world's largest private charitable trust worth $33 billion that is dispensing funds for medical research, education, etc. Last year, Warren Buffet announced that he would give $31 billion of his Berkshire-Hathaway stock to charity; most of it to the Gates Foundation. Guided by the belief that every life has equal value, the Foundation seeks to reduce inequities and improve lives around the world.

If you want to be rich, be prepared to pay more taxes. The wealthiest people in the US, the top one percent of earners, pay 36% of all federal income taxes. The top 5% pay 57% of all federal income taxes. If the government wants to continue doing "good," a lot of tax revenues needs to come from the wealthiest families. When the wealthy do well, the government is able to afford to "do good" for society.

With the victory of capitalism over communism, the "democratization of wealth" is becoming more commonplace in Russia, Eastern Europe and China. Deng Zhao Ping, the architect of China's transformation, was smart. He told his fellow politburo members that in order to advance. China had to let some people get rich.

But, just where does one start? First, you need to accumulate some capital. If you work for someone else, save enough to quit your job and start your own business. It is a long shot to becoming a billionaire, but it's worth the try. On your way to becoming a billionaire, the million markers become commonplace.

Over seven million households now have a net worth of over $1 million. That is five times the number that existed in 1989. The odds of someone becoming a millionaire through personal efforts are good -- about one in five. Do what you're good at, work smart, invest wisely and you too may be pleasantly surprised.

Comments

[Christian Finance]

Carlos Slim is now the richest man in the world. His $67.8 billion net worth has overtaken Bill Gate's current $59.2 billion.

http://www.foxnews.com/story/0,2933,287936,00.html

[Lord]

If you spending rate is less than 2-3% of your portfolio, you will become rich without even trying. A billion takes a little more work though.

[broknowrchlatr]

For kicks, I did the "how could I be a billionaire" calculation. If I continue to max out my 401k, 2 IRAs, HSA... work till I'm 70, get 11% return, and cna live off $40k a year in today's dollars at retirement, I'd be a billionaire at age 101. Just not worth it.

[Scott]

I think it is important to really evaluate what it means to be a billionaire because, for me, other than the philanthropic possibilities, it is no better than just being financially well off (say, a millionaire). Once you have more money than you can spend in your lifetime, why want more? See what I am saying???

[Millionaire Mommy Next Door]

Interesting information - I especially enjoyed learning how long it takes to count to a billion!

I'm so happy that I feel content with my millionaire wealth level. I simply can't imagine working hard enough, or long enough, to get to the billionaire mark. I agree with Scott - once you have "enough", why want more? I suppose the problem is that we're human, so we tend to WANT.

Did anyone else catch the show recently on Warren Buffet? So rich and he spends so little in his personal life.
~Millionaire Mommy Next Door

[Matt]

The government taking society's most productive members' money to "do good"? Now that's rich.

[thomas killeen]

what happens when we run out of prefixes for describing amounts in words or numbers ( million, billion, trillion and so on ) ? i guess we'll figure something out.

[Telemill]

Wow, this was an enlightening article, I just love you man! Your blog is sooo good. Damn, I'd just be content to count for maybe 5 years. [smile]

[Dr. Artfredo C. Abella Ph.D.]

In Spain there is always a saying: " Take anything in this world and pay for it." I think this also really true to the idea of becoming a billionaire, we can aspire in becoming one but we must be willing to pay the consequences in attaining that status. In a broader sense, I believe it is worth aspiring to dream and attain that status but we must do it for the discipline or for what it will make of us in becoming one - enterprising, having our business, frugal, hard working and can leverage other people's talent, ideas, money, services and intelligence. As also advocated in the parlance of International markets - create the goods and the demand will follow which will spell affluence, wealth and even that aforementioned status. I think becoming one will really relay to us that even the Bible would show the facts when it tells: " To those much are given much are also expected." I think God is endowing certain individuals to have very much in life so that they will be in a position to also provide much for the society. It can be philanthropy, creation of products that are so useful to the modern needs of men or simply provision of services for the rest of the unfortunate brothers. I think we can sum it up in one sentence "Find a business need and fill it!!"

[Bereket]

I think becoming a billionaire has nothing to do with you being lucky. You just need to work on the right businesses that has the potentials to make you a billionaire. One thing is foe sure to my knowledge there is not a JOB that pay that well, Think about it!

[anobody]

unfortunatley, everyone on here including the author is not a billionaire. The best guess to become a billionaire is to do what you love and hope that love translate to billions. Even if it doesn't directly you can always diversify your millions and turn it into billions hopefully.

[anobody]

when you say entertain people are we talking about high society party planners/promoters, or, musicians?

[David Sam]

Wow i must say i am so blown off by your blog. i know now attaining the billionaire status doesn't come cheap. Thank a billion and watch out for me cause very soon you will find me having that status