I believe that the rich people are different from the others like me for example. Old money is money coming from generation to generation inside families. New money, is self-made money and it’s the New Rich. It’s coming from company founders with equity fortunes, and few top CEOs with super salaries, bonuses and stock options. If we put together, Old Money and New Money people, it’s only about 1% of the Ultra-Rich.
The wealth of the New Rich, came from all walks of life and most from businesses and stocks, is growing faster than the Old Money that is about the 9% of the Ultra-Reach wealth. And the new rich are growing richer. End of last century we had about 13 billionaires in the world and now, there are more than 400.
The Money Gap
The ultra-rich are well-known as visible spenders specially in societies where wealth is not distributed more equally. Because there where most people make roughly the same income and everyone can afford to buy what’s available, people do not fixate on material goods and possessions lose their significance as status symbols.
But inequality changes this viewpoint. The more wealth is concentrated in a privileged few persons, the more important luxury brand items become.
In these societies, possessions identify those who have succeeded and those who have not and you are valued by what you own and you buy, not by who you are.
Medium-sized homes between 600 and 1200 square meters, cost their owners up to $650,000 per year to maintain, over their cost price. That includes the cost of nannies, housekeepers, a personal assistant, and a household manager. But these homes are not large enough for the extra rich people and if they have larger houses, sometimes the yearly maintain costs are up to $3 million or even more because it’s also taking more and more people to run the lives of high net-worth individuals.
Rich Lifestyle and their Cars
Almost everybody is Extremely-Rich wants only unique cars that they don’t see on every street like Mercedes Maybach, Bentley Continental, Lamborghinis etc. They use also second tier luxury cars, like BMW and Jaguar, with a chauffeur!
The best Hobbies for the Rich and Restless People
The Super-Rich people if They want to spend time on hobbies it can be very expensive for them. For example, collecting art is very popular among the rich 1%, even for those who know nothing about art. Normally they buy art on the basis of brand names, like Picasso, Manet, Gustav Klimt or Andy Warhol and this kind of art looks good in the living room and in the portfolio.
But because the supply of Picasso’s and old masters is limited, many of them are chasing the same paintings. That’s why the prices are escalating at Sotheby’s and Christie’s auctions of fine art. Prices are reaching for the stratosphere as the Super-Rich become art collectors.
Super Rich and their Shopping Lifestyles
The fever for luxury goods is transmittable among the extremely-Rich. There are luxury store where the customers arrive by helicopter and are driven in golf carts across the marble floors of the store.
Watches have become a status symbol for the 1% rich club, especially the handmade Swiss watches from the most desirable brands like Rolex, Franck Muller, Rolex, Cartier and Breguet.
Super-Rich and Who are they
We can find the names of the Super-Rich on the Forbes magazine annual list of the 400 richest Americans or the Riches people in the World.
Size Does Matter for a Status Symbol like A Yacht
The New Rich often buying mega-sized yachts because it’s a status symbol. The larger yachts are equipped to carry a helicopter, a half-dozen cars, a few motorcycles, as well as a decompression chamber for the divers, a huge room freezer, a gym and of course night-vision cameras, a swimming pool, a basketball court, a large Jacuzzi, a music studio and many many others. And may be a private submarine is launched from its docking station on the lower deck.
The longer the motor yacht, the greater is the prestige of ownership. Some yachts are too long for the local marinas, and must use the commercial ports, docked side by side with the normal container ships and ferries.
Living Rich and Donating to the Poor
When the Ultra-Rich decide to contribute to charity, they also make philanthropy a competitive event. Most of them have a chain of personal foundations, with which to help worthy causes and to avail themselves of income tax benefits. Some of them compete for attention in the social scene at Palm Beach charity balls, where ladies still wear tiaras and men wear white tie. Charitable donations are the price of admission to these events. And everyone keeps track of the contributions, tit for tat.
In a well-publicized burst of altruism, Ted Turner, of the Turner Cable Network, pledged a billion dollars to the United Nations over ten years, saying “A billion’s a good round number,” and “You have to learn to give.” and “The world is awash in money.” Well, if you say so, Ted!
For the Ultra-Rich, one of the perks of wealth is getting your photo in the vanity magazines. Local glossy magazines like Hamptons, Aspen Peak and Gulfshore Life, are filled with party photos featuring the new rich. The Ultra-Rich buy positions on the boards of charities, art museums and opera companies with a few contributions. They buy the naming rights to public buildings and theaters to see their name on a bronze plaque.
The Trickle-Down Theory of Conspicuous Consumption
You would think that the conspicuous consumption of the Ultra-Rich would trickle down to benefit the rest of us. As John Kenneth Galbraith said, “If you feed enough oats to the horse, some will pass through to feed the sparrows.” And the wealth does trickle down in bits and pieces to their masseuses, the pilots of their yachts, and the manufacturers of all the image enhancing products they use. But, no matter how much they spend, their consumption is a relatively small percentage of their net worth. The wealthy don’t even think about gasoline prices, unless they own an oil company.
I’m so poor I can’t even pay attention. – Ron Kittle
Selling to the Ultra-Rich is an inflation-proof business. Their consumption is not affected by price increases. In fact, it is price-insensitive. The higher the price and the more conspicuously useless the purchase, the more the Ultra-Rich prefer it as a status symbol. If you are in business, remember the old adage: Sell to the classes, live with the masses.
Borrowing for the Ultra-Rich Lifestyle
All is not rosy in the lifestyles of the Ultra-Rich. The richest 5% in the U.S. account for 20% of all the debt. For the Ultra-Rich, their income grows every year, but their share of national wealth has remained constant. They are spending more of their income, rather than accumulating it as wealth. Saving has been replaced by runaway spending.
The Ultra-Rich who are founders of a public company have another financial quandary. Their company stock can be their biggest asset, but they do not want to sell off any shares, because they expect the stock price to continue rising. So, to support their lifestyle, they borrow money, using their company stock as collateral.
More than half of the Ultra-Rich believe that wealth has not made them happier. They keep chasing one opportunity after another, hoping to find tranquility and peace of mind. 10% felt that wealth actually created more problems than it solved. The happier ones have learned that money is not a privilege, but a responsibility.
May the future fulfill all your “champagne wishes and caviar dreams.”
I hope life brings you much success. I wish you a very happy day.