Bruno Mars said it for us when he sang how a person wants to be a billionaire so freaking bad. But once you do become a billionaire, would you know what to do with all that money? Of course, the first thing you should do is to make your whole family comfortable, secure the future of all of your loved ones and make sure you have enough saved for the most unexpected of situations. After all that, what else can you do?
Maybe we can get some tips from existing billionaires. While probably 99 percent of the population would probably never get to see even just a percentage of the money of Carlos Slim of Telmex (he is the richest among the rich with $69 billion) and Bill Gates of Microsoft (he is just at number two with only $61 billion), it will still be nice to see what they actually do with their money.
6 Invest and Reinvest
You need money to make money. It does not grow in trees nor can you just sweep for it from under the bed. These billionaires know this fact more than anyone else, which is why they always set aside a chunk of money for further investments.
Some can use it to expand the business vertically and horizontally, like what Gates did with Microsoft. Others would diversify in order to attain more stability and security. Slim has investments not just in Telmex, but also in America Movil and Grupo Carso. Warren Buffet’s Berkshire Hathaway has a variety of investments in different fields and industries, including encyclopedias, electric and gas utilities, home furnishings, railroads, vacuum cleaners, jewelry, newspaper publications and even in the manufacture and distribution of uniforms.
Billionaires also take time to study the economy and see where it is headed. For the longest time, Buffett has been investing in stocks like those of Johnson & Johnson, Procter & Gamble and Kraft Foods. John Paulson bought stock shares of JPMorgan Chase, Family Dollar and Sara Lee. George Soros was enamored with stocks of banks, including JPMorgan, Chase, Goldman Sachs and Citigroup. As a result, they were able to ride the crest of the extended and historic stock market rally.
Money is not easy to come by, even with billionaires, which is why they never rest on their laurels and remain on the lookout for market trends. And in the stock market, it means getting out before it cools down.
With the recent move by the Federal Reserve Board to stimulate the economy by releasing more money, analysts see a surge in inflation. This might lead to an increase in interest rates that will dampen the real estate sector and, eventually, the stock market. As a result, Buffett, Paulson and Soros were seen quietly dumping their stocks recently.
Billionaires invest wisely and they make it a point to get out before the investment goes south.
5 Philanthropy/Charity Work
Possessing all that money while a significant portion of the population live in poverty will definitely affect the conscience. This is why some billionaires make it a point to make a donation that can help alleviate poverty around the world.
Gates established a $2 billion foundation with his wife Melinda that aims to increase the standard and quality of health care and education in different countries. Buffett has been donating $1.5 billion each year to the same foundation on the condition that the foundation gives away an equal amount to qualified beneficiaries.
Buffett has also donated more than $3 billion to other children’s charities. He plans to give away most of his wealth before he passes away.
Pierre Omidyar of eBay has also been a consistent supporter of social and economic charitable organizations.
A lot of billionaires believe that education is the key to poverty alleviation, which is why they have been endowing educational institutions with huge amounts of money. The music and movie mogul David Geffen has given $100 million to the University of California, Los Angeles to provide scholarships for medical students. Michael Moritz, the venture capitalist from Sequoia Capital in Silicon Valley, has donated $116.4 million under his and his wife’s name to Oxford University for the granting of scholarships to undergraduate students.
Other billionaires have made donations to prominent universities with the hope that it would lead to better research and services. Among them are the husband and wife team from Nike, Phil and Penelope Knight, who have given out $125 million to the University of Oregon Health and Science Institute for its cardiovascular department. James Simons, the hedge fund manager who chairs the private investment firm Renaissance Technologies, gave the University of California, Berkeley $60 million for its computing center.
Carl Icahn, the corporate raider who has made hostile takeovers of various companies, showed he has a heart by donating $150 million to the Mount Sinai School of Medicine.
3 Research Grants
There have also been billionaires who have been focused on supporting research institutions that can help improve our quality of life. Paul Allen of Microsoft has given $300 million to the Allen Institute for Brain Science. Mortimer Zuckerman of Boston Properties gave out $200 million to Columbia University’s Mind Brain Behavior Institute. The Google duo of Larry Page and Sergey Brin has provided money to researchers involved in the study of climate change and development of energy efficiency products.
2 Community Giving
Others simply give back to the community, like Mark Zuckerberg, who has donated $500 million to the Silicon Valley Community Foundation; David Gundlach, who provided $140 million to the Elkhart County Community Foundation; John Paulson, who gave $100 million to New York’s Central Park Conservancy; and Fred Fields, who earmarked $150 million to the Oregon Community Foundation.
1 Come Out and Play!
On top of all these, billionaires do deserve to have some fun with their money. Larry Ellison paid out $600 million to own 98 percent of Lanai Island.
Roman Abramovich bought himself a football team and sometimes has sushi delivered across the continent even if it means paying almost $63,000 for just one order. Ralph Lauren has more than 70 exotic vehicles, as he collects expensive super cars the way we collect matchboxes when we were kids.