Aleks Bahdanovich, Author at My First Class Life - Page 2 of 2

Aleks Bahdanovich

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Warren Buffet’s Advice: Billionaire’s Top Tips for Achieving Financial Independence

Businessman and venture capitalist – Warren Buffett is arguably the most successful investor of the 20th century (if not of all time). Buffett began investing at the early age of 11, and by the time he was 13 he was already running a small business as a paperboy. Fun fact: that same year, little Warren filed his first tax return, claiming his bike as a $35 tax deduction.

young-warren

Warren Buffett was almost certainly born with business in his blood; however, his words of wisdom can benefit your financial life as well (regardless of your blood chemistry). Although he is now in his mid 80s, Buffett has still yet to write a book. He definitely has enough knowledge for a small non-fiction series, though. Regardless, his voice remains the most respected and trusted amongst both, investment professionals and the investing public.

That being said, let’s take a look at what financial knowledge the Oracle of Omaha is willing to share. Saving his best investment advice for a little bit later, let’s first address Buffett’s more general financial tips for the average Joe.

Buffett strongly advises everyone to limit what they borrow. He claims that it’s simply not possible to become rich by living on borrowed money – which makes sense (to most people, at least).

borrowed-money

I’ve seen more people fail because of liquor and leverage – leverage being borrowed money. You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.

Now that you are familiar with Buffett’s thoughts on loans, you need to start thinking of borrowing money as a ‘non option’. If, however, there is no other choice and you absolutely need to borrow some money, you should do so with an objective assessment of future cash flow. If you don’t have a solid plan to pay this debt off you will become a slave to the interest (perhaps even for life).

With Buffett being most recognized as an investor, let’s see what he has to say regarding stock.

In his 1989 letter to shareholders of Berkshire Hathaway, Warren Buffett claims that…

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Clearly, buying a stock is about much more than just the price. Finding a ‘wonderful’ company that you believe in, and ignoring gloomy economic and stock market forecasts may seem like risky business; and although it might be, it has worked for Buffett many times over. Coca-Cola being a prime example of a (at least financially) wonderful company that Buffett was smart enough to invest in.

coke-stocks

All this talk about “wonderful” companies raises some confusion.

What exactly is a wonderful company? Well, although it’s hard to quantify “wonderful”, Buffett has probably done it. According to the financial wiz – a “wonderful business” includes the following:

The business has to be understandable. You should be able to tell quite easily what the company is about.
There should also be a good return on the capital without much debt.
Cash flow should show profit, and the earnings are predictable.
Their franchises are strong, and they have the freedom to price the product as they see fit.
Finally the company shouldn’t take a genius to run, and the management must be owner-oriented.

Pretty solid advice. It’s definitely a good idea to include at least one such ‘wonderful’ company in your portfolio. If you’re patient enough, a wonderful company should (according to Buffett) always be worth the investment.

When investing it’s important to first understand the investment pyramid, and then develop an investment strategy. Consulting professional advisors regularly to review and diversify your investments is also a great idea. Like Buffett famously said –

Risk comes from not knowing what you’re doing.

finacial-pyramidIt’s human nature to want to make more money, and it’s very common to see potential investment opportunities that promise high returns. These offers are so mouthwateringly tempting that we fail to objectively analyze the higher risk that comes with these high rewards. As hard as it may be, it’s vital to stay disciplined and set all emotion aside when playing the investment game.

Since Warren Buffett himself holds a very disciplined investment style, it comes as no surprise that he is a strong promoter of patience in investing. Buffett claims that trying to get rich quick is a mistake, and that –

“It’s pretty easy to get well-to-do slowly. But it’s not easy to get rich quick.”

Pretty much all of Buffett’s advice can be summed up in a classic idiom – slow and steady wins the race. Over the years, this idiom has become Buffett’s mantra, and this approach consistently outperformed the market for decades, making Warren a billionaire many times over.

Another great Buffett quote regarding long-term thinking can be found in the 1986 letter to the shareholders of Berkshire Hathaway. The quote reads:

No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.

Now, that’s a good point. Buffett argues that money is part of nature, not something that can grow overnight. Most people make the mistake of overestimating what they think they’ll make in a year, and underestimating the potential earnings of a decade. Sticking to the Buffett Principle, you can make money without constantly changing portfolios, simply by staying invested for the long term.

longterm-finacial-plan

Life is like a snowball. The important thing is finding wet snow (opportunities) and a really long hill (long term).

This Buffett classic connects quite well with the idea of waiting for your investments to pay off. Investing with long-term plans in mind can be stressful, but it’s important not to panic while seeing short-term fluctuations. You only lose money when you sell, however, if you have the backbone to wait it out, you just might come out on top, after all –

Over the long term, the stock market news will be good.

I think it’s fair to say that Buffett is in the right here. Over the last century the United States has endured two wars, a great depression, numerous recessions, oil shocks and the like, yet the Dow rose from 66 to 18,000. It’s probably safe to say that it’ll keep climbing in the long run.

So, like Warren Buffett once said:

… If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.

time-is-money

This connects back to the aforementioned idea of a ‘wonderful’ company. Invest in what you believe in, and wait it out. It might even be best to not check on your investments every day. Getting a low evaluation might discourage you and force you to sell your stock at the worst possible time. Always look at the big picture.

To wrap it up – educate yourself, and know what you’re getting into. Follow Buffett’s simple words of advice, and be patient with your investments. After all, “it is not necessary to do extraordinary things to get extraordinary results.”

Tax Avoidance & Evasion: Are Taxes Only For The Little People?

Like the Queen of Mean notoriously said, “only the little people pay taxes,” and although she was convicted and sentenced on numerous counts of tax evasion, Leona Helmsley had a point.
queen-of-mean

It seems that big corporations, or anyone worth more than a few peanuts, is trying to minimize the amount of taxes they pay on their wealth. Let’s take a look at the largest scam ever and the way corporate America avoids billions of dollars in taxes every year.

So, how exactly does the corporate world get around the taxman? There are many clever tricks the filthy rich use to remain rich and get even richer – let’s take a look at a few.

First on the list are tax havens. This loophole is based on a very simple idea. If taxes are high in one geographic region, then you can either move your company somewhere else (where the tax payable is lower), or simply register it elsewhere. This workaround has been a significant asset to corporations, and for some time now relocating has been a quite standard way to reduce or completely avoid paying taxes. After all, this process is not that big of a disadvantage, since after everything is up and running, residents can usually return back to their home country.

cayman-islands-bank

This is a big part of why tax evasion through these offshore havens occurs on a massive scale. A recent study has discovered that about a total of $20 trillion is currently hidden in offshore tax havens. If you’re curious, the most popular offshore destination is in the infamous Cayman Islands – one of the few territories with more registered organizations than people.

Shell companies are also used quite widely in tax evasion practices. These ‘shell’ companies have no substance, and only exist on paper. The shell company has a totally legal existence, but in reality the company doesn’t provide any actual services or sell any goods. By using these shells, large corporations (or any entities, really) are able to funnel all of their money through these companies – effectively avoiding the unpleasant tax brackets. You’re probably asking yourself – how can this actually work? Well, since most corporations use shell companies to buy and sell in foreign governments – they do not need to report these international operations domestically. The idea behind this sketchy practice is pretty clever, really.

Similar to the shell company method of tax evasion, shell trust funds are also quite popular. This scheme involves wealthy entities paying into a trust fund, which accepts their money as “donations”.

The next step in this scheme is my personal favorite. This same trust fund then offers its members very cheap loans (often times interest free). The borrowers then surely and consistently ‘forget’ to pay the sum back – effectively dressing up their salaries as low interest loans. Doing this allows members to write off most of their income tax, as they receive tax credits for their ‘donations’.

business-deal

Unethical? Maybe. Effective? Absolutely.

The three methods of tax evasion discussed above are the most popular ways of dodging the metaphorical tax bullet. Some lesser known, but shadier methods are also used by greedy billionaire entities.

Equity swaps are a great example of the classic ‘scratch my back and I’ll scratch yours’ scenario. This scheme works when two wolfish corporations come to an agreement to help one another reduce their tax payable. This is done by exchanging the gain and loss of a set of assets without actually transferring the ownership. Everybody wins! Well, everyone besides the IRS…

Goes to show – the more money you have the more you want. Moral values go right out of the window the second there is an opportunity to stuff more money into your (already) tight pockets. That being said, you’ve got to commend the creativity some companies and corporations display while squeezing through these tight loopholes.

An example of such creativity is the way some corporations avoid paying their capital gains tax.

Before going off on this rather sneaky method of tax evasion, let’s first review what capital gains tax actually is. This tax kicks in each and every time there are capital gains (didn’t see this coming, huh?). Capital gains, as a term, refers to the profit realized on the sale of any non-inventory asset that was purchased at a cost lower than what you’ve sold it for. Property, stocks, bonds and all sorts of precious metals are popular commodities on which capital gains are often realized. So, if you’re lucky enough to profit on the sale of your assets, you’re legally subject to this tax. Obviously, anywhere there is tax to be paid there are also greedy, rich people, very interested in avoiding it.

capital-gains

Although, the loopholes surrounding capitals gains tax are getting patched up rather quickly, there are still ways of getting around paying this tax. Using shares as an example of a non-inventory asset, let’s take a look at how one might get around their legal obligation to pay the tax.

One cunning way involves borrowing some money from an investment bank – using the aforementioned shares as collateral after purchasing options (at a fixed rate). What you do next is simply not pay the loan back, and the investment bank will be forced to cash your collateral. This allows the borrower to avoid being caught in the capitals gains tax net, while still having access to all of the cash – pretty ingenious if you ask me.

The above is evidence enough that the big guys don’t usually have any intention of paying their full dues. If there is a way to cut on tax, you can bet your bottom dollar that the corporate world will do their best to do just that. After all, the rich have to find new ways of getting richer.

Now that we know what actually goes on behind the closed doors of corporate America, let’s ask another question. Who are the biggest offenders in these tax schemes?

Well, every industry has its perpetrators, and we see giants from tech (like Microsoft), pharmacies, investment banks (looking at you Goldman Sachs), retailers, fast-food chains, and even heavy machinery companies. Literally, almost all billion dollar corporations do their best to keep as much of their ‘hard earned’ money tax-free. Officially, the corporate tax rate in the United States is around the 35% mark, however, many corporations pay only small fraction of that. Some are even sneaky enough to get a hefty refund from the federal government – more on that later.

microsoft

Let’s take a look at a few companies that take advantage of sneaky accounting, and shady (yet effective) tax practices.

The well-known General Electric (GE) has pulled in more than $80 billion in profit over the last decade. According to the average of 35% corporate tax rate, GE should have paid about $28 of those $80 billion back to the government. In reality GE only paid an average of 2.3% back in taxes over the decade, or a total of approximately $1.85 billion. Still a substantial sum, but peanuts compared to the corporate standard.

Verizon has done even better. According to a number of studies, the telecommunications giant hasn’t paid a pretty penny of tax in the last 3 years. To make this fact even better, Verizon does not only avoid being taxed, but the company also receives billions of dollars back in the form of tax subsidies. When confronted, Verizon obviously denied any tax evasion allegations.

The popular online marketplace – Amazon, also has some great tax sheltering tactics (all legal, of course). Although, Amazon didn’t reduce their taxable income by quite as much as some of the other companies listed here, the online store definitely deserves a shout-out. America’s most beloved retailer only pays back about 4.3% out of 35% corporate standard tax, while completely complying with the law.

amazon-screen

The household names listed above are only a small fraction of the thousands of companies that practice the same shady tax principles. While the average American shells out thousands of dollars each year in taxes, legal loopholes often allow million (and billion) dollar companies to pay nothing at all.

The Kardashian’s Net Worth: Can You Keep Up?

Arguably it’s more than fair to say that the Kardashian family is doing rather well.

It’s also no secret that their cash flow is not limited to only one source (or even half a dozen) of income. The family is raking in some serious cash from every direction, and between their TV shows, endorsement deals, fashion lines, shops, perfumes, ect – the Kardashians are piling up their millions while living large.

Before their first TV show, “Keeping Up With The Kardashians,” debuted in 2007 the family name was best associated with OJ Simpson’s defense team. Now, the Kardashian name is on everything. Literally. Their mixed sources of income bring the family millions and millions of dollars each year – not too bad for a group of 8.
oj-with-kardashians

Ok, so how much money do the Kardashians actually have?

While it’s impossible to tell exactly how much money the family has, it is speculated that the collective Kardashian net worth is in the neighborhood of a modest $200 million – with Kim being responsible for about a quarter of the sum alone. Reading this estimate some people might think the $200 million figure to be rather low. However, it’s important to keep in mind that the family loves (I mean LOVES) to live large, and the Kardashians are well known for their amazing ability to spend money – just look at what they’ve spent on plastic surgery alone.

Now that it’s established that Kim is worth an approximated $45 million, let’s look at the rest of the Kardashian clan. Starting at the very top of the cash pyramid – Bruce Jenner is apparently worth $100 million himself (according to OK! Magazine). Khloe and Kourtney are both worth about $20 million each, Rob is worth $3.5 million, and the aspiring teen model Kendall Jenner is worth somewhere in the neighborhood of $2.5 million. Let’s not forget the fifteen-year old Kylie, who on her own is worth a mean million (she’d be worth a lot more if not for all of her expensive plastic surgeries). While that million might seem like peanuts contrasted with her older siblings, the teenybopper also drives a $125,000 Mercedes-Benz – so don’t feel too bad. Funny enough, it only took the spoiled teen 18 days after getting her driver’s licence to crash the beautiful beast. Goes to show that money isn’t everything.

kylie-jenner

Ok, so we know that the Kardashian family is absolutely loaded, the only question remains is where does the family cash actually come from? The ubiquitous Kardashian family has taken their reality TV fame to the next level – translating one television series into a very impressive branding empire.

Let’s take a look at how their cash stream actually breaks down.

First on the list is the well known TV Show – Keeping Up With the Kardashians. In 2012 it was reported that the family signed a $40 million contract to produce 3 more seasons. What’s quite strange is the fact that the show is growing in popularity despite its 2.8/10 ranking on IMDB. (Perhaps we love to hate the Kardashians?) Next is the popular Kim K sex tape. Kip dropped a lawsuit against Vivid Entertainment for the distribution of her sex tape with Ray J, for a reported $5 million settlement. (Not bad for a low-budget home production)

kim-and-ray-jay

Personal appearances also earn the Kardashian’s some fair cash – especially Kim. It’s reported that Kim receives upwards of $100,000 per appearance. This figure might even reach millions, if Kim is requested to make an international appearance. Since everyone loves gossip, magazines are another great source of income for the not-so-modest family. Kourtney’s baby, and Khloe’s wedding each sold to over $300,000 to tabloids, while Kim and Kris’ wedding shots were sold to People magazine for a ridiculous $1.5 million. Their clothing line is also worth noting. The Kardashian Kollection for Sears reportedly pulled in between $200 and $300 million in sales in one year alone (2012). Obviously all of the earnings don’t go to the family, no doubt they take a hefty cut.

Another source of income for the Kardashians is their mobile game. Although the game is free to download, you can still spend real money on in-app purchases. You can buy things like character clothes and energy. So, how much money does this game actually make? Well, about $8.10. Every second. That’s right, the App Store phenomenon rakes in $486 every minute, which comes out to a crazy $700,000 each and every day.

kim-kardashian-mobile-game

The above are just some of the more popular sources of income the family has. There are many other outlets as well. Now that we know where the Kardashians get their money, let’s take a look at how they choose to spend it.

Cue Kim Kardashian with her plastic surgery splurges and unhealthy shopping addiction. The multi-millionaire reportedly spends upwards of $1 million, monthly. Most of us would assume that Kim K never has to work another day in her life again, mainly thanks to the empire that her family has built, but that may not be true. “She’s the rich version of living paycheck to paycheck,” a family friend commented on Kim’s shopping tendencies, and apparently it only got worse after she began dating the rap beau – Kanye. Currently, the millionaire celeb easily spends over $100,000 a month on clothing alone. “I’m out of control with my spending!” Kim herself states on her expensive habits (quite an understatement, honey).

kim-shopping

With everything outlined above I think it’s fair to say that the Kardashian economy is thriving. Seemingly the Kardashian empire is self-sustaining. If by any stretch of the imagination the family will start to run low on cash – all they have to do is lend their name to any project to cash out large. Simply endorsing a concept and providing some style pointers to any venture (i.e. the mobile game) will let them collect the fruitful labor of the Kardashian economy.

That being said, their fifteen minutes won’t end until we ignore them.

The Secret Formula for Wealth and Success: Think and Grow Rich

So what’s the secret? How do I become rich and powerful, what do I need to do?

Good question.

We probably asked ourselves questions along these lines at some point of our lives (after all, who doesn’t want to be rich?) Some of the more eager of us may have even looked into this topic more thoroughly by searching the depths of the Internet and ravaging non-fiction library shelves.

how-to-make-money-online

According to Mr. Napoleon Hill, however, the answer to these questions is not so secret. His argument for the root of success and financial independence begins with the prerequisite of ones deep internal desire for something. Hill addresses this (and similar) question in his book, which was dubbed as the most important financial book ever written. Spoiler alert: Mr. Hill never actually (explicitly) shares the secret with the readers. He does, though, leave a number of clues throughout the book, and leaves a pencil for the sharper of readers to connect the dots of success on their own.

It’s hard to filter through the hundreds of self help books and fluff filled waste of time articles to get to the good stuff. Napoleon Hill’s book – Think and Grow Rich opts to deliver you the “key to financial wealth and power”. It’s a fairly widespread opinion that Hill has written a very deep book on the power of the subconscious. The book sold tens of millions of copies to this day, and the popularity does not seem to die down – the hot self-help book constantly finds its way back to the New York Times bestseller list.

best-seller

Well ahead of his time, Hill published the first edition of Think and Grow Rich in 1937 after completing 2 decades of research. Hill’s research began when the steel tycoon – Andrew Carnegie – assigned him with organizing a Philosophy of Personal Achievement. Though gig for a mediocre journalist armed only with an introductory letter from Carnegie.

Despite the unlikely success of the project, Hill set out to interview over 500 ridiculously successful people, including Thomas Edison, Alexander Bell, George Eastman and many, many other iconic figures. After years of interviews and data analysis, Hill finally revealed the priceless wisdom of the most successful in the form of the 13 steps to success (all of which are listed and expanded upon in this book).

The fundamental concepts that are described and taught by Napoleon Hill are bound to change a life or two (maybe even a few million). Napoleon Hill was often described as “wise, humble and funny,” by both his friends and colleagues. Hill makes it a point to make the reader think and reflect on the text – he does not simply spoon feed his audience his opinion. Regardless of how you read it, the book will teach you how to become rich – and the riches Hill refers to throughout the book are more than money; the Philosophy of Personal Achievement can be applied to anything in life.

success

All of that aside, let’s focus a little more on the contents of this undoubtedly great read.

Think and Grow Rich contains a large number of great arguments and unique ideas, but the gist of it can be summarized in a few points.

  1. When you want something, and you want it bad enough it’s important to set a plan. Goal setting will help you accomplish your most desired wants. Let nothing stop you and you will be successful.
  2. Critical thinking is very important. Pick a mentor group of people you hold to high regard and if you’re ever confused or uncertain – imagine what they’d advise you to do.
  3. Finally, Hill was a huge believer that a positive mental attitude can solve all problems.

The three points above don’t really do the book its due justice. There is so much you can take away, but it’s a good first taste for those that have never touched this book (if you still fall into this category, I strongly recommend you give it a read.)

Let’s look at that first point in a little more detail, considering it’s arguably the most prominent concept of Hill’s work. Throughout his book, Hill emphasizes the importance of having a set goal, and actively thinking of ways of reaching it. It’s not enough to simply want something. You need to crave it, you need to breath it. Every conscious thought needs revolve around your goal – you need to obsess over it, and your daily choices have to revolve around it. When these conditions are met Hill argues that it becomes very difficult not to find a way to reach your goal – whatever that goal may be.

obsession

Only one question remains: Do you want it bad enough?

Although Hill doesn’t tell us the secret to becoming rich and powerful (per se), he still inspired a lot of minds to try and decipher his message. A guy named Brian Kim wrote a whole book ‘revealing’ Hill’s secret. Kim doesn’t beat around the bush nearly as much as Hill and states the hidden secret in the very first chapter – resolving all ambiguity once and for all.

Brian Kim wasn’t the only person to get inspired by Hill, and there have been many self-help books based on similar principles ever since. A great example of this is the 2006 best seller – The Secret. (The little self-help book sold over 20 million copies, how secret can this secret be?)

The Secret is based on the superstitious law of attraction and claims that positive thinking can yield life-changing results, such as increased wealth, health and happiness. This concept is very similar to Hill’s – who is a strong believer in the power of the mind. Mind you, Hill doesn’t simply suggest that you sit on your tush waiting for wealth and happiness to fall into your lap. It takes a lot more effort than that. “Wishing will not bring riches.” he writes. “But desiring riches with a state of mind that becomes an obsession, [and] planning […] will.” Sounds easy enough, doesn’t it? So what are you waiting for?

the-secret

Goal setting and planning as a road to success seems so obvious, and yet this elementary concept seems to intimidate people. Some will read and read and read, but never apply what they learn. Simply soaking up information and letting it go to waste might be even worse than remaining ignorant.

Have you read a book or listened to a powerful speech and get motivated enough to “change your life”? You work on defining your goals for a day or two, but do nothing after that. Eventually you read another book, and still nothing happens. This becomes your source of frustration and you believe that the key will be found in the next self-help book, or the next seminar you pay hundreds of dollars to attend. This leads to an inescapable cycle that traps people not strong or dedicated enough to follow through.

Hill and those following him make a point to explain that wanting something is not enough. You need to have that burning passion inside of you, and you need to be willing to give anything it takes to achieve your goals – only then will you be successful. Fear of the unknown is a naturally occurring phenomenon in us humans, but it’s also amongst the things that prevent us from tapping into our fullest potential and achieving our greatest dreams.

As mentioned somewhere above, Think and Grow Rich has influenced and inspired thousands of lives. Amongst these people are a number of “rich and famous” public figures like Oprah Winfrey and Warren Buffett. These multi-millionaires are amongst the masses that were moved by Hill – Oprah even credits some of her hard earned success to this book. Warren Buffett took the time to read Think and Grow Rich on one of his business flights. Although, he doesn’t explicitly state that the book influenced his success in one way or another, it’s still quite clear that Buffett has a very similar outlook on life. Buffet himself grew rich from an early age, and he also brings his wisdom to the world.

oprah-and-buffet
Oprah and Warren Buffett are just two of the many successful people that have read Hill’s book. After all, Think and Grow Rich is very easy to read, and the whole book is only around a manageable 200 pages. Invest some time and pick up a copy, who knows – this quick and easy read might just change your life forever.



Inside the Billionaire Lifestyle: What It’s Really Like To Own Your Own Private Island

Imagine laying on the warm sand of an abandoned, white sand beach – somewhere in the middle of the pacific. Imagine the birds singing, and the salt water wind blowing gently over you hot body. Now imagine being completely alone, with the exception of the ones you love most. Sounds like paradise – doesn’t it? The description above is just a small taste of what it’s like to own a small chunk of heaven on earth.

Buying an island is very similar to buying a condo – only on a much greater scale. If you’re one of the rare few who fall under the umbrella of people who don’t notice the price tag prior to making a lavish purchase, you just might have what it takes to own a personal chunk of paradise.

open-up-your-wallet

Most private islands run for at least six figures – a tad more than what most of us would be able to pitch for a piece of floating rock. Thousands of uninhabited islands dot our oceans. These tiny specks of untapped potential are waiting for the few wealthy enough to purchase them. The Indonesian Archipelago includes 17,000 individual isles and the Philippines boast over 7,000. Just because most islands run over $1 million, it doesn’t mean that Islands less than six figures aren’t available. However the old adage holds true – you get what you pay for.

The cheapest islands on the market are typically found in places like Michigan, Maine, and Nova Scotia, Canada. These are often populated with pine trees, rocky shores, a fishing shanty and maybe a dock. But isolated luxury islands in tropical climates, replete with housing and lavish accommodations, can cost more than 99% of us will make in a lifetime.

nova-scotia-private-islands

To give a point of reference for the kind of gradient that exists between those who can afford islands and those who cannot.

Bear with me.

Let’s assume that an average American graduates high school at the age of eighteen and graduates college four years later. Let’s also assume that the fresh graduate lands their dream job making a generous 60k a year – right out of college. Getting comfortable in his job our hypothetical character works day in and day out until the ripe age of 65, and retires. At this point, the old man would have about $2,580,000 in his bank account had he saved every penny – Before taxes.

Even after all of these assumptions this scenario is still a stark contrast to Larry Ellison, who reportedly spent $500 million on a pretty rock off of Hawaii. I’ll spare you the calculator work – that’s a difference of over $497 million between our hypothetical man’s untaxed life savings and Mr. Elisions vacation home. Fun fact – this makes this island, at least for 99% of us, the world’s most expensive parking spot for Ellison’s 454-foot mega yacht.

larry-elison-island

Obviously parking a yacht isn’t the only thing you can do on your own island! This might come as a surprise to some, but the strictures surrounding island ownership vary according to the policy of whichever national government is steward over it. Islands off the coast of China, for example, cannot be bought at all, but are only rented for a period of time. No rent-to-own isles off the coast of Shandong and Jiangsu either! Other islands, however, open up possibilities most of us cannot even begin to imagine.

Cue Michael Oliver – perhaps some of you have heard how this real estate tycoon started the libertarian Phoenix Foundation (in addition to making his millions). If that’s not impressive enough, read on!

With the brunt of his many bucks, Oliver would raise the reefs of Minerva, long submerged in Pacific waters, with sand shipped from Australia. On this land he would found the libertarian Republic of Minerva, located just southeast of Fiji. Here, Oliver envisioned a political bastion insulated from the capricious and selfish desires of big government. Eventually, territorial disputes with the island kingdom (those still exist?) of Tonga, would lead to an expeditionary force being sent to Minerva reefs. In the resulting chaos following the occupation, the Republic would collapse, ending Oliver’s libertarian dream. Too bad.

libertarian-utopia

This is the sort of thing we read about in Ayn Rand books and in the utopian societies of science fiction. Let me clarify: this is the kind of thing we are only willing to humor in works of fiction. But this is fact. It happened.

This amazing and somewhat tragic tale of a man with enough money to artificially convert submerged reefs in the pacific into his own socio-political paradise accurately depicts the kind of lifestyle available to those who can afford to buy an island.

If, like me, you find the price range for a private island outside your pay grade, have no fear! Recent shifts in the island real estate market, along with some clever entrepreneurship, have spurred the invention of the “private island vacation.” Regular folks – who can’t afford to shell out millions for a pretty rock of their own – can rent their paradise off the coast of Florida or on an island in the Caribbean for as little as $500 a night.

Just remember – you always get what you pay for.

Worlds Wealthiest Pets: Animals Living Life in First Class

Take a moment and try to remember when you got your last deep tissue massage. How about the total in the past year? My bet is – not too many, if any at all. Now, if you were Trouble - Leona Helmsley’s spoiled brat of a Maltese you’d need more than two paws to count your therapeutic sessions with a professional masseuse.

dog-massage

Trouble is a lucky mutt, inheriting over $12 million (even more in dog money) in a trust fund that disinherited both of Hemsley’s grandchildren.

Leona’s precious pup isn’t the only pampered pooch that is driven around Manhattan in a stretch limo. Karlotta Leibenstein’s beloved German shepherd – Gunther III is currently richer than 99% of the human population, with an offensive net worth of over $320 million. Unfortunately the millionaire canine passed away a month after the death of its owner, and the fortune went to one of Gunther’s pups – Gunther IV.

Now that we’ve established the fact that we live in a very twisted world, let’s talk about the lavish lives these pets actually lead. For some of the wealthiest people their pets are their only sources of true love. This is especially true for eccentric individuals that alienate themselves from all other humans. These people are also in the subset of those that spend thousands of dollars on psychic readings and life coaching seminars for their pets.

dog-psychic

Some of the wealthiest pets get to enjoy custom-made meal plans – and not for medical reasons, either. Special diets are seen as “good for the animals”, with the owners spending hundreds if not thousands of dollars on meals prepared by world-class chefs.

dog-chef

More than a quarter of millionaire dog spoilers report that they spend in the ballpark of $25k on wardrobes of their pets, and the same amount on birthday gifts,  each year. Yup – twenty-five thousand dollars – an amount equivalent to a modest down payment on a house.

 

dog-clothes

If you think that’s ridiculous then you’re going to love this.

Several pets soar over skyscrapers and beautiful landscapes in private aircrafts – alone, while most of us have to cramp in business class.

Dogs are not the only pets that are privileged to receiving royal treatment. There are many cats, birds (chickens included) and at least one primate that are richer than the majority of the worlds population will ever be.

Many regular, every-day people think that this spoiled treatment is a bit over the top regarding puppy care (and rightfully so), however, trust accounts are still being set up for the four-legged one percent. With complete disregard for humanitarian efforts and charitable causes, these self-centered mammals are laughing/barking all the way to the bank, while the average folk struggle along, scraping to get by. So much for being a man’s best friend.

rich-dog

So, how much do the worlds richest pets actually have in their accounts? Let’s take a look at the list Forbes doesn’t tell you about:

  1. First on the list is the aforementioned Gunther III. The German shepherd that is richer than 99% of Germans has his paws on over $320 million.
  2. Next is Blackie – worlds most spoiled feline. This lucky (and ironically black) cat is worth in the neighborhood of $25 million.
  3. Frankie has about $14 million to his name – this mutt lives in luxury in his San Diego estate. Talk about a quality doghouse…
  4. Gigoo the hen has a bank account with a modest balance of approximately $10 million. Makes you wonder how much a Gigoo-egg omelet would cost… hmm.
  5. Betty White’s Golden Retriever – Pontiac is next on the list. The dog has a $5 million trust fund set up in his name, and is set for life in case anything happens to its loving owner.

wealthiest-pets

The above listed millionaire pets are only some of the many cats and dogs that live well above anything the regular folk can image. The only question here is: what possesses these eccentric pet-owners to sign away their life savings to their furry mammals? In the case of the aforementioned Maltese – Trouble, the courts officially declared that its owner Leona Helmsley was in fact mentally disturbed. Funny enough, the dog had a team of lawyers who defended the case for the mutt to keep the fortune. Good for the dog, not so good for the lawyers – who temporarily become the laughingstock of the lawyer community.

 

dogs-in-court

With the pets being worth what they are, it comes as no surprise that the furry drool machines can be at risk of dognapping. Many of these pampered pups receive dozens of threats in their lifetimes. Puppy snatchers will threaten to kill or kidnap a loved pet with the hopes of collecting a meaty ransom. In the case of Trouble, who received in the neighborhood of 20 to 30 death and dognapping threats, its owner went to great lengths to keep the pup safe. Helmsley hired a full time security guard to tail (pun intended) and protect her beloved Maltese.

Regardless of the security measures these eccentric millionaires take, the dogs don’t live forever (at least they go to heaven, right?). In most cases where the dog previously inherits a fortune from its late owner dies, the money is reverted to the family estate – some good news for those of us annoyed by the luxurious (and sometimes downright silly) displays of pet aristocracy.

Although these millionaire pets don’t live much longer than a decade, the amount of love and luxury they receive in their few years is often much more than what an average person can imagine.

Apparently it’s a dog’s world.

 

The Hidden Financial Perks of Being the U.S. President

Ever since the United States declared independence in 1776 the country has cherished its newly implemented democracy. Although, the new changes steered the country away from displays of aristocracy and monarchy it’s still very difficult to avoid giving preferential treatment to the central executive leader of a country. After all – it is a big job, and time management gets a bit complicated when you have to balance family dinners and legislation signing.

Everyone knows that the presidential position comes with a very long list of responsibilities, however, if you happen to land the White House gig you’ll get to enjoy an even longer list of perks and benefits – including a personal, top secret ZIP code.

white house

You simply can’t write an article outlining a list of presidential perks and not talk about the meaty salary.  The paycheques have increased over time, historically every 20 years. Harry Truman left office in 1949 making a modest $100k, 20 years later with Richard Nixon in the House the salary doubled to $200,000. Finally, the last (most recent) raise in presidential history came in effect in 2001 – doubling the previous compensation of $200,000. Currently, the United States President receives a yearly salary of $400,000, and a number of expense accounts such as $100,000 for personal travel, $19,000 on entertainment, and a few others. While his salary is taxable just like anyone else’s, these expense accounts are not.

nixon-money

First on the list of presidential perks is the White House itself – breakfast not included.

Although it’s no Buckingham Palace, the White House has come a long way over the years. The not-so-modest mansion runs about $4 million in yearly maintenance, flowers alone costing upwards of $250k.

The complex includes the central executive residence flanked by East and West wings. All in all the 6 storey, 55,000 square foot house includes: 132 rooms and 35 bathrooms, 28 fireplaces, a tennis court, a bowling alley, a family movie theatre (more on this later), a jogging track, a swimming pool, a putting green, as well as a full size basketball court. Besides the impressive amenities, the president has access to pretty much-unlimited staff, as determined by Congress. The House employees 5 full-time chefs (one of which is strictly a pastry expert), a social secretary, a chief calligrapher, countless groundskeepers, florists, valets and butlers, totaling a total of 96 White House employees (not including security personnel).

white-house-chefs

No wonder that Ronald Reagan’s son used to call it “an 8-star hotel”.

Although, not everything is free for the first family, the President and his family doesn’t have to worry about everyday things like grocery shopping. In fact Nancy Reagan wrote in My Turn that “during eight years in Washington [she] didn’t once set foot in a supermarket or almost any other kind of store”. The White House budget covers pretty much everything but personal expenses, and funny enough the first family is billed for food they eat when not entertaining foreign dignitaries or public officials.

As you can imagine the President and his guests will have a hard time being bored during their stay in the iconic home. The house is equipped with many amenities that the President can enjoy in the safety and comfort of his own home. Take the above-mentioned private movie theatre for example – where the family can enjoy the latest blockbusters. This theatre is the epitome of luxury. Converted from a long cloakroom in 1942, the theatre currently seats 40 lucky guests in a red-dominated showroom overlooking the sculpture garden. The room is occasionally used to rehearse major speeches, but for the most part the theatre remains one of the luxuries the first family gets to enjoy. The audience is able to request movies and TV shows, choosing from a very impressive collection – Netflix can’t compete in this house.

white-house-theater

‘Work hard, play hard’ is definitely applicable to the oval office.

The President has always been known to throw awesome parties at the White House. These events attract all kinds of big names, including Hollywood celebrities. Invites to these parties are extremely hard to come by, so invitees do not generally decline. The parties are quite lavish, and full of class – as expected from the presidential host. The Obamas are particularly well known for throwing memorable parties and Barack has even gotten up to sing for guests!

All off the legislation signing and singing to his guests will eventually tire out the President. Whenever he needs a little breathing space he can take a short trip to Camp David. The camp is located in wooded hills about 100km northwest of Washington, D.C. The area is secluded and very secure.

The camp perimeter includes 12 cabins, a swimming pool, a bowling alley and a skeet shooting range. Camp David was established in 1935, and each president since Franklin Roosevelt has made use of the amenities – President Bush used Camp David nearly every weekend when he wasn’t on the road. “It’s like a resort hotel where you’re the only guest,” Tricia Nixon commented on Camp David.

camp-david

Although, the camp is not open to the general public, John F. Kennedy often allowed White House staff and cabinet members to use the retreat when he and his family were not there.

Next on the list of presidential perks is the classic armored limo. The iconic ride is designed specifically for the President, and every new President gets his very own new model. The Secret Service refers to the heavily armored vehicle as The Beast. The car can seat seven people, including the President. Similar to a NYC cab a glass partition divides the front from the back. The two rear seats are reserved for the President and another guest; the seats have the ability to recline individually to maximize comfort.

Most of the details of the car are classified for security reasons, but there are some details that we do know. The beast comes equipped with its own oxygen supply, night vision system, security measures against biochemical attacks, and much other defensive equipment. The trunk of the car holds a blood bank filled with the President’s blood type, to be use as an emergency measure.

presidental-armored-limo

Overall this beast is pretty much a small tank, the only downside of which is fuel economy. The reported fuel efficiency is about 8 miles per US gallon, or 29 liters per 100 km – definitely not ideal for cross country road trips.

Air Force One is next on the list. The presidential Boeing jet carries up to 100 people (including a 26-person crew). The onboard electronics include about 238 miles of wiring (twice the amounts in regular 747), with shielding tough enough to protect the crucial electronics from the electromagnetic pulse associated with a nuclear blast. The aircraft comes with 85 onboard telephones, a collection of two-way radios, computer connections, and fax machines. The plane is outfitted with countless security measures, and the aircraft can jam enemy radar and can inject flares to throw heat-seeking missiles off-course.  To top it off – the plane can also be refueled in mid air, allowing the presidential convoy to continue without the need to land.

air-force-one

The plane has designated areas for all of the operations, complete with staff, media, security and telecommunication rooms. The President, though, gets to enjoy a personal suite located under the cockpit. This luxurious suite is complete with an office, bathroom, bedroom, as well as a personal workout room. The aircraft is also a great place to impress fellow heads of states, as Obama did when he invited David Cameron aboard to watch an American football match.

When the President travels outside of the Air Force airspace, the presidential team works hard to ensure his safety. President Bush’s trip to London in 2003 required over 900 staffers from Defense, 600 from the armed services, 250 Secret Service officers, 103 CIA staff, 44 staff from the State Department, 30 from the Cabinet, 16 congressmen and 12 sniffer dogs. This massive manpower is required to ensure the President arrives safely at his destination regardless of the 500 (on average) death threats he receives each month.

secret-service

Security is one the largest perks the President receives. The Secret Service protection continues after the President leaves office, as well. The President, spouse and any children under the age of 16 are privy to lifetime security. Besides security, there are a few other benefits the president receives after leaving office. These include: pension, allowance, travel, health benefits and the presidential townhouse. Just to elaborate further on some of these perks and to put the out-of-office bonuses into perspective let’s take a look at what the taxpayers have to shell out to fund these benefits. Congress determined that former Presidents must travel as part of their civic duties, and are allowed up to $1 million in travel expenses. The Pension is the Executive Level One Pay, which is currently set at $199k, in perpetuity. The health benefit category only applies to Presidents that have served 5 or more years. This package also includes the bonus of priority and use of veteran’s hospitals. Interestingly enough, George Bush turned his down.

presidential-pension

These taxpayer funded benefits are not too shabby, but they’re nothing compared to the money Ex-Presidents rake in writing books. Just to put some numbers to this claim: George W.  Bush made $7 million for the first 1.5 million copies of ‘Decision Points’ and Bill Clinton netted a $15 million advance for writing ‘My Life’. Obama wrote ‘Dreams From My Father’ in his 30s, and although the book was initially only a modest success, it started flying off shelves when he ran for President. Book sales are still Obama’s main source of income – which helps to explain his massive net worth.

book-deals

Getting a book deal is only one of many ways Ex-Presidents can make bank by capitalizing on their prior position. Another way to cash-out big while doing minimal work is by taking the podium. Former presidents generally get around $125,000 per speech. Bill Clinton especially finds this route to money appealing, considering he has given hundreds of speeches around the world since 2001. Clinton told CNN that he “never had any money until [he] got out of the White House,” and that he has been doing “reasonably well” ever since. Quite an understatement considering he’s earned over 75 million dollars since leaving office.

Bill Gates: The Secret Lifestyle Of The Richest Man In The World

It probably comes as no surprise, but the personal life of Bill Gates is a bit different than the billionaire tycoons who rival his wealth, or the millionaire actors who rival his name recognition. In-fact, if you ignore the minor detail that the guy is worth a jaw-dropping $80 billion, you’ll find that Bill has more in common with the ordinary man than he does with the average billionaire. With a few notable exceptions, the entrepreneur famous for founding Microsoft spends his money and his time more like the rest of us.

Bill’s working life is pretty well known, being that his name is synonymous with a computer giant, but it’s worth mentioning since even the richest of us spend most of their waking hours working. Bill co-founded Microsoft with Paul Allen in 1975, and the rest they say is history. Bill has remained involved with the business operations to this day, but his role as the formal leader (Chair) of the company ended in 2014, though he now serves as Microsoft’s Chief Technology Advisor. Since changing roles, Bill focuses most of his time on his philanthropic efforts and his family.

bill-gates-philanthropy
From the facts we know about his lifestyle, Bill seems to be the same old quirky kid who demonstrated his ability to jump over a chair in a network tv interview, or who programmed his private school’s schedule to place him in classes with the best looking girls. In Bill’s own words, his only real “splurges” would be his mansion which he lovingly calls Xanadu 2.0 and a personal plane. Although owning the largest private island in Belize is also worthy of being called a splurge, even for a billionaire. Xanadu 2.0 was named for the estate of the protagonist of Citizen Kane, and is a sprawling 66,000 square foot Washington mansion valued at over 145 million dollars, as of 2009. As one might expect, the mansion of a computer tycoon is a little different than the homes of the other 1%.

bill-gates-home

The mansion itself is composed of several interconnected buildings which are managed electronically through a central server and hundreds of micro-computers. Guests and residents control everything from the lighting to the temperature through small pins which they wear. And these custom settings follow the user as they move through the house. Bill has truly created a “smart-house” by giving attention to the tiniest of details. Occupants listening to music will find that speakers hidden behind the walls will let their tunes follow them through the house.

bill-gates-smart-home

With a net worth of over 70 Billion dollars when Bill Gates says that he splurged on something, he really means it. His private jet, a Bombadier BD-700 Global Express is a far cry from the small Cessnas or Gulfstreams which are the staples of the private flying world. Estimated at a price-tag north of 40 million dollars, the Bombadier can fly non-stop for 4200 miles, and reach a top speed of Mach 1. Bill makes good use of these capabilities in his frequent trips to Africa as part of his work for the Bill and Melinda Gates Foundation and for his family vacations.

bill-gates-private-jet

Besides spending some serious cash on Xanadu 2.0 and his island in Belize, Bill also has an impressive collection of cars to fill it with. When it comes to cars, Bill is clearly a Porsche fan. He’s been sighted driving in a 911 Carerra, and owns a handful of rare models like the 1988 959 Coupe and the 930 Turbo. The 959 Coupe is especially rare, with just 337 models ever produced. Rumor has it that Gates and Microsoft colleague Paul Allen were influential in getting Congress to pass a law making the 959 street legal in the US.
Between his private jet, his fleet of rare Porsches, and a 5 million dollar vacation on a rented yaght in 2014, it’s clear that Bill is willing to pay top-dollar when it comes to all things travel and transport. As part of his philanthropic work Bill has a regular excuse to travel the world, but he’s not beyond spoiling his wife and kids with trips to Rome, Belize, Croatia, Antarctica, and other exotic locales.

bill-gates-porsche

Bill has long identified himself as preferring a printed book over a pdf or an ebook, and Xanadu 2.0 boasts a private library with a few items which would make most librarians drool. In 1994 Bill bought the Codex Leicester, a collection of original writings from Leonardo Da Vinci, at auction for a cool 30.8 million. His private collection also includes writings from Abraham Lincoln and other influential minds.

Any discussion about where Bill spends his money isn’t complete without talking about the Bill and Melinda Gates Foundation, which is worth over 27 Billion dollars. In a January 2014 Ask Me Anything thread on reddit.com, Gates explained that he feels it’s important to focus on specific areas with philanthropy. For the foundation, the global focus is on health inequality while the domestic (US) focus is on education inequality.

bill-gates-on-reddit

The work done by the Gates foundation is the best evidence that even now Bill has the same audacity to dream big as when Microsoft was first starting out. Both Bill and the Foundation have publicly committed to eliminating Polio from the earth, let that sink in for a moment. Less ambitious but equally impactful goals include researching and distributing new vaccines, revolutionizing condoms and other birth control methods, and providing access to safe sources of water. The Foundation is funded by contributions by Bill and Melinda Gates, and their close friend Warren Buffet.

Like Bill, Buffet is also something of an oddity among the world’s richest. Buffet lives in a modest 6,000 square foot Omaha home, and until 2007 did his driving in a 2001 Lincoln Town Car. For the most part, Buffet is Gates without the big-ticket “splurges”. The two met for the first time in 95′ in what both of them assumed would be a short and dull encounter. Buffet recalls asking former Washington Post writer Meg Greenfield, who also attended the historic encounter, just how long he would have to stay to remain polite. Much to their mutual surprise, the two became close. Close enough for Buffet to donate and pledge approximately 4 Billion to the Bill and Melinda Gates Foundation in the last decade.

bill-and-warren

To this day, Gates remains a dreamer and by all accounts an eccentric. Accordingly, the only item left on his bucket list is “don’t die”, and his biggest regret thus far in life is not knowing another language. While Gates counts himself among those who hope for an eventual path to immortality to emerge, he does feel that it would be “egocentric” for ” for rich people to fund things so they can live longer” while Malaria and TB continue to plague the rest of the world. At least for the time being, it appears that Bill isn’t going to be the one to bring us the time required to rewatch Lost another 50 times.

Beyond his continued work at Microsoft, or his charitable work with his foundation Bill prefers to spend his time playing tennis, reading, and touring “interesting” locations with his children… like garbage dumps, power plants, missile silos, and scientific sites like the Large Hadron Collider.

Large-Hadron-Collider
While touring an exotic garbage dump may not rank high on the list of perks you would expect to get for being a child of one of the world’s richest, it turns out that the perks are actually pretty limited. Bill and Melinda have made it clear that they agree with the inheritance philosophy of Buffet, and the vast majority of their wealth will go to charitable efforts, rather than their children.

Bill and his wife are well-known as the billionaires who started the Giving Pledge alongside Buffet in 2010. Those who participate pledge at least half of their wealth to go to charity. So far, 81 billionaires have signed on. This might make one wonder how much his children will be left with in the end. In contrast to cases like Paris Hilton, the Gates children will have “the freedom to do anything, but not sort of a lot of money showered on them so that they can go out and do nothing.” Okay, so the Gates children won’t be billionaires, but at least they’ll have the worlds best gadgets since their father is one of the fathers of computing right? Wrong. In a 2013 interview, Gates elaborated on his parenting and family life, and it turns out that the Gates youngsters have a pretty ordinary upbringing. They do household chores for a modest allowance, attend church on Sundays, go on trips with their parents, and they wait till they’re 13 before they can have a cell phone. Much to the discontent of their youngest (Phoebe) Bill and Melinda have decided that 13 is the “appropriate age” for a phone, the same age that a young Bill Gates was first learning to program in BASIC.

bills-kids

All in all, Bill leads a life which at times can be pretty lavish, and he’s got some serious toys that the rest of us could barely dream of, but he spends most of his money on others. Whether it’s through donating to charity, funding his foundation, or taking the family on a lavish vacation, most of his serious expenditures all involve other people. Bill may be wealthier then the populations of a few countries, but he still enjoys simple pleasures like the rest of us.