Why Millionaires Don't Keep All Of Their Money In The Bank

Have you ever wondered why the super-rich spend a lot of their money on exotic cars, super yachts, grandiose mansions and expensive art collections? Is it simply because they are avariciously materialistic? Well no it isn't, they are not quite as superficial as you might imagine.

Let's deal with that bank question first. The majority of banks will only guarantee up to 250,000 dollars, or pounds or euros, or whatever. So if you have fifty million in the bank and the bank goes bump, all you will recover is that quarter of a million. A very good friend of mine once asked me, "If you have ten thousand dollars in the bank whose money is it?" Of course, I answered it was mine. "Wrong." my friend said. "The money belongs to whoever has possession of it, and that my friend is the bank." He was right of course.

So, the majority of super-rich people keep their money tied up in a mixed portfolio of assets, stocks and investments. Most of Bill Gates's money is tied up in Microsoft. That's a darn sight safer than a bank.

On the other hand, high-end assets, like property, stock and investments are not only a lot safer than a bank, but over the long term, they give better returns. What's more, they have the enjoyment of owning and using those assets whilst they are earning massive amounts of passive unearned income. And that is one of the ways by which the rich get richer.

The trick is to find a way to generate sufficient of what is called disposable income. That is money that you have above and beyond the amount you need to maintain a comfortable life, money you can afford to lose without having to suffer any real hardship.

During the last two centuries, one of the most common ways in which multi-million dollar fortunes were made was via manufacturing. Cars, railways, airlines, clothes, food even......in fact, just about anything that could be easily and economically replicated on a large scale.

Eventually, service industries also became a popular way to make a fortune, banking being one of the first service industries to generate a multi-million dollar income. Again, it was something which could be easily and economically replicated.

Where does that leave us mere mortals? Well, it's all about buying something like a house or a car, or even stocks and shares and living long enough to see it increase in value over a very long period. Believe is how Warren Buffet got to be as wealthy as he is. Warren bought what he thought would continue to grow in value throughout his lifetime. A prime example would be something like Coca-Cola stock.

In the world of pop music millionaires, George Harrison of the Beatles once bought a McLaren F1 for between 800,000 and one million pounds. Many years later son Dhani sold it for 37 million! But you don’t always need big bucks to start.

It might surprise you to know that there was a time way back when you could buy a Ferrari 250 GTO for a song. There is a story about a guy who bought two ex-movie Aston Martin's for 1500 hundred dollars and traded one of them for a 250 GTO. That car is now worth between sixty and seventy million dollars! As for the DB5, that is worth at least a cool million! So it's a case of buying the right thing at the right time and holding on to it until you make old bones.

Sometimes, it's all about buying just normal stuff, like an old Beatles 45 which now commands quite a tidy sum. As for me, I still can't seem to manage to do any more than scrape by on a lot less than the minimum wage. If only I had kept all that stuff which passed from being new and cheap, through used trash, to worth a small fortune. I would dearly love to find that old pink plastic Beatles guitar my mother bought me for Christmas back in 1964. Oh well, back to being one step from poverty-stricken.