Our society has become increasingly fascinated, captivated and enthralled with the billionaire list. The billionaire list, whether the Forbes or Bloomberg list, are the point of references we turn to in order to accurately know who the billionaires of the world are. In fact, if a person is not on the Forbes billionaire list then we believe them not to be a billionaire.
However, how accurate are billionaire lists? How are the assessments made and can we trust them? In this blog post we get into how accurate are the lists of billionaires.
HOW A BILLIONAIRE’S WEALTH IS CALCULATED
A billionaire’s wealth is calculated based on their net worth. To calculate a person’s net worth it’s only a matter of knowing the total assets of a person minus their total liabilities. In layman’s terms, it is what you own versus what you owe.
Simple enough, right? No. Let’s look into why.
ASSETS & LIABILITIES
First of all, the inaccuracies can pile up when you do not know all of a person’s assets and liabilities. This can be hard to assess because a person may have assets and liabilities that are not disclosed, for whatever reasons. Below we will list some of the things that are considered assets and liabilities. You will see how complicated it can be to evaluate some or to even know if a person is fully disclosing all of their assets and liabilities. Or if the people compiling such lists of billionaires have knowledge of all the assets and liabilities of a person.
Assets and Liabilities for Forbes Billionaire list include:
- Your Home
- Other Real Estate
- Other Vehicles
- Household Items
- Retirement Accounts
- Mutual Funds
- Cash Value Life Insurance
- Savings Bonds
- Checking And Savings
- Other (any other assets of value)
- Home Mortgage Principal
- Other Mortgage Principal
- Auto Loans
- Student Loans
- Credit Card Debt
- Other Loans
ARE ALL BILLIONAIRES ACCOUNTED FOR?
As you can see from the above list of assets and liabilities it’s possible to miss a few billionaires, or further, it’s possible to be a billionaire and opt to not be on the list. Yes, not all billionaires want to be disclosed as such.
Why, you ask? Some billionaires prefer the low key life. They don’t want the exposure that comes from being on the billionaire list.
Some billionaires will go to great lengths and pay a lot of money to top lawyers to remove their names from public records. They do this through trusts, offshore accounts, foundations, holding companies and multiple layers of shell companies.
These same methods can also be used illegally to avoid paying taxes, that is, tax evasion.
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ANOTHER BILLIONAIRE LIST CRITERIA
Billionaire lists are comprised of individuals only. Family wealth is not considered but only a person’s individual wealth, which can further increase inaccuracies of a particular individual’s wealth. Some of the richest families in the world are the Walton’s, Rothschild, De Beers and the Al Saud family.
Billionaire lists have also been accused of underestimating wealth in an effort to avoid public backlash. This is true in cases where they want to maintain a particular image of royal family members or certain political leaders.
THE WORLD’S BILLIONAIRES
And as always we like to close with a saying, quote or adage and today’s is from businessman, boxing promoter and former boxing champion Floyd Mayweather (video below): FORBES DON’T KNOW HOW MUCH MONEY I REALLY MAKE. EVERYTHING THAT I DO IS NOT REPORTED TO FORBES.
Now, go forth and change the game!