I often write on Quora.com, where I am the most viewed writer on financial matters, with over 303.6 million views in recent years.
In the answers below I focused on the following topics and issues:
- Is the Queen more powerful than Jeff Bezos? I explain how, in reality, Bezos has less power than many other billionaires and why it illustrates a wider issue about wealth.
- What are the best assets to invest in during periods of high inflation, and is such inflation even likely in the first place?
- Would I rather live in Singapore or the UK, considering all positives and negatives? Which is the better place for an expat to live more generally?
- If you are willing to put in the work, can you become successful and achieve everything you ever wanted?
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It is subjective but I would say, yes, in many ways she is. The answer to this question also illustrates some of the misleading information the media gives out about wealthy people.
In reality, there are different “classes” of billionaires, just like there are different types of millionaires.
Let’s start with a millionaire analogy.
Person A is a pension. Their total net worth is $5m. They are a pensioner and $4.9m is held in the house.
Person B is also worth $5m. However, person B only has $500,000 in a house and $4.5m is in a well-diversified portfolio.
They are both worth the same. Yet Person A might actually be poor. There is an expression for this – “house poor”.
That is one reason there was such an outcry about the so-called “mansion tax” in the UK.
People realized it would affect little 85-year-old women who are widowed, left with a big house, and are struggling to pay the bills.
That person is likely poor unless they sell the house and downsize. The same is true for Person 3, who has a $5m net worth but it is all tied to a business.
That person doesn’t have a liquid net worth. If the business fails tomorrow, his/her net worth is down to close to zero.
The first person, in comparison, has a liquid net worth of $4.5m, and the whole economy would have to collapse to lose most of the money, as he/she is diversified.
This leads me to billionaires. In reality, just like millionaires, there are some “paper” billionaires.
There are also, broadly, four kinds of billionaires
- People with private businesses, like Trump. For this kind of billionaire, it isn’t easy to raise money, because the company isn’t listed on the stock market. There is also less transparency about wealth because these kinds of firms don’t have a publicly available price.
- People like Bezos. One step up from the first example. They have most of their money in one stock – usually the company they founded.
- People like Gates and Buffett. One step up from the likes of Bezos. They have got diversified portfolios. Gates was like Bezos in say 1999, 2000 and 2001. Now only about 25% of his wealth is in Microsoft stocks. Bezos is likely trying to do what these two men are doing – he probably wants to gradually sell his Amazon shares and diversify his wealth. If he does it too quickly it could rattle the market.
- Finally, you have people who have whole countries behind them. Royalty. On paper, they are worth less than most billionaires. Some aren’t even billionaires if the money has been spread across many family members. Yet for these people to become broke requires whole countries to fail
Let’s put it this way, when you hear about $500million paintings being sold, the buyer is usually some royal family member, often in the Middle East, like this one MBS in Saudi bought:
Power is a different question, and obviously, the Queen has less power than some autocrat in the Middle East.
Yet the landed aristocracy in the UK, has much more sustainable power than business billionaires who come and go.
Wealth seldom lasts three generations or more, but when it does, it is usually related to royalty.
In three or four generations, the Queen’s great great great grandkids kids will probably have some power.
The same thing is unlikely in Bezos’ case.
Those are three examples of many media articles I could have given.
The point is, inflation is like the bogeyman. People always worry about it every few years.
They worry whenever oil increases, there is QE and lower interest rates.
I don’t expect inflation to permanently shoot up in a big way. This period reminds me of 2010–2011.
A recovering economy. Rising oil and commodity prices. Being interested in the likes of gold and silver.
Fast forward ten years and gold and silver have fallen in real terms, the USD has strengthened even adjusted for the recent weakness, and stocks have outperformed.
I do think this is the first credible inflation threat for decades due to:
- De-globalization in some supply chains
- A very strong economic recovery in some parts of the world. The US economy took just over a year to recover versus over two and a half years in 2008
- A big stimulus on top of a strong economy
- People have more money in their pockets and are more confident compared to 2008
Yet I still don’t think it is likely. What is less likely than big consumer inflation is asset price inflation.
Assets have always done better than wages long-term, but in a world of 0% interest rates, the gap could be bigger than usual.
Historically the US stock markets have one 6.5% average inflation, with some periods doing better and others worse, and international about 5%.
Since 0% interest rates, the returns have generally speaking been better.
It won’t last forever where returns are above historical norms, but it is more likely when interest rates are low.
The businesses that do best during inflationary times tend to be firms where you can make a one-time investment, rather than ongoing ones.
The reason is simple. If you have a capital-intensive business that regularly needs injections of cash, then if inflation is high, each additional injection will be much more costly.
Any asset with a positive yield will be much better than cash with inflation at 2% per year, never mind 5%.
What is true, however, is people should be worried by even the possibility of inflation hitting 5% for a few years.
Losing 2% per year to inflation adds up. 5% adds up much more quickly!
That will only change when, and if, interest rates rise significantly.
In that case, some investors might want to put a portion of their money in cash, even if it is a small percentage.
I am from the UK, and have never lived in Singapore, so I would pick Singapore.
That is assuming it would only be for a few years or a decade, and getting in was relatively easy which it isn’t.
That is because Singapore has the following advantages:
- Low tax – sometimes zero tax on certain types of overseas income
- Lower cost for some things but not everything
- The crime levels are lower
- Infrastructure is better because it is a newly developed city, within the last generation or two.
- On average, it can probably grow more quickly than the UK as a whole, which means that government spending and taxes are more likely to be stable. Of course, governments need revenue globally now due to Covid.
Against that, if an expat has kids, the UK could be considered.
That is because international schools are expensive and local schools often aren’t suitable.
If somebody wants to live with loads of space, moreover, the UK is probably better, but you would need to leave London to find that.
If you need to find a job, the UK is probably better in most industries, because it is a bigger market of 67 million people, versus a hub economy of 5.7 million.
Singapore has many good opportunities but in a “narrow and deep” sort of way.
That is one reason many expats leave if they lose their jobs.
I have noticed in the UK, expats living locally are more likely to find another position.
Freedoms are also probably better in the UK, as Singapore might be economically advanced, but it isn’t yet politically developed.
I once spoke to a very well-read Chinese man on this. He commented that he thought that, quote, “Japan is the only developed country in Asia, and soon South Korea”.
I, wrongly, assumed that he didn’t know that Singapore had a higher per capita income than both.
The point he was making is being a “developed country” isn’t the same as being developed economically, as the former requires many aspects such as the rule of law, democracy, the right to protest, etc.
The UAE and Saudi Arabia are also developed economically, but not politically.
It is this latter point that might stop some expats from staying in Singapore forever.
From looking around my network, and doing some research on this, it seems to depends on the following factors:
- What you want in the first place
- How much time you have to achieve it
- What you are willing to do to achieve it
In terms of the first aspect, in truth, most people are encouraged to think big when they are young.
Then when they are 15, 16 or 18 they are encouraged to think “realistically”.
Yet often this version of realism is aiming too low for many people.
Therefore, many people do achieve what they hope to achieve when they were say twenty, but fewer manage to achieve what they hoped for earlier on.
For example, if your ambition by your early twenties is just to have a stable job, take two holidays a year and retire a millionaire by “getting rich slowly through compound interest” then you have a very good chance of achieving it.
At least in many countries. And there is nothing wrong with that, if that life makes people happy.
In fact, I have argued on many of my answers that it is realistic for people to achieve early retirement or millionaire status on an average income.
However, now let’s say that somebody wants to start their own business, life overseas, become very wealthy not just for money but to also set up a charitable foundation later on, there will be more naysayers than in the first situation.
What is more, in the second example, that person will need:
- A lot of persistence
- The ability to delay gratification. If you want to start your own business, you might need to spend a few years earning less than your friends or your previous income
- To make sacrifices.
- Take calculated risks
- Ride the good luck and take advantage of it, and come back from bad luck.
- To work smart and not just hard.
- To do all of the above, and much less, over a long period of time, even if it doesn’t seem to be working.
Many people come to realise, with age and experience, that they should have aimed higher to begin with, especially if they weren’t encouraged to aim high from a young age.
A lot of this comes down to upbringing. If somebody comes from a community where nobody even works, then unless they are lucky, there won’t be much encouragement.
Kids from such communities are often even told that going to university isn’t for “people like us”.
Conversely, sons of politicians don’t think getting into politics is difficult, and the same is true for sons and daughters of sports stars and businesspeople.
It is possible, then, to have everything you ever wanted, but there are no guarantees.
It isn’t just about hard work in many cases. Many people tend to give up in adulthood on their biggest dreams, when they realise that hard work is no guarantee of success, and merely just one component.
What is more, if you achieve everything you every wanted, you will want more!
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 303.6 million answers views on Quora.com and a widely sold book on Amazon
In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:
- What do successful people do differently in the areas of health, wealth, or finding a spouse? I speak about the commonalities I have observed.
- What tips can I give people starting their own business, apart from the obvious things?
- What are the main tips from Warren Buffett which are useful for the average person? I go over some of his more down-to-earth suggestions for average investors.
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