An entrepreneur who interviewed 21 billionaires says there's a common misconception about how the world's richest people spend their money
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- Cash is only a small part of a billionaire's wealth, according to Rafael Badziag in his book "The Billion Dollar Secret."
- Billionaires' net worth is largely tied to their companies, real estate portfolios, and assets.
- Contrary to people's perceptions, most billionaires view money as something to invest, rather than something to spend, he wrote.
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Don't judge a billionaire by their net worth.
According to Rafael Badziag, an entrepreneur and author of "The Billion Dollar Secret: 20 Principles of Billionaire Wealth and Success," many people harbor a common misconception about billionaires and money.
Badziag spent five years conducting face-to-face interviews with 21 self-made billionaire entrepreneurs around the world (defined as those with a net worth of at least $1 billion) and researching their lives and companies.
People "think billionaires sit on mountains of money and don't do anything but invent new ways of spending it," he wrote. "Nothing could be further from the truth ... keeping $1 billion in cash would cause up to a $135,000 opportunity cost each and every day."
Almost all of billionaires' wealth, he said, lies in the companies they own, in stocks, or in real estate and other assets: "Billionaires don't see money as something to spend on themselves. Money is there to invest and create. It is a form of universal energy in business that allows them to make things happen, to turn their visions into reality."
Consider Jeff Bezos: His annual salary is reportedly only $81,840, but most of his $156 billion net worth comes from his Amazon shares. Likewise, Mark Zuckerberg lives off an annual salary of $1 - a huge chunk of his $70.6 billion net worth is tied to Facebook stock.
Meanwhile, Richard Branson, the billionaire chair of the Virgin Group, has a hefty real-estate portfolio consisting of places like Necker Island in the British Virgin Islands, Sun Bunyola in Mallorca, and Mont Rochelle in South Africa. These real-estate holdings are just another Virgin Group business branch known as Virgin Limited Edition - Branson uses them as hotels and retreats. All of these properties are considered assets that comprise part of Branson's $4.1 billion net worth.
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