Extravagant Lifestyles of Wealthy Entertainers,
Athletes and Business Moguls
The rich are different from you and me. Old money is inherited money. New money, the New Rich, is self-made money. It includes company founders with equity fortunes, and top CEOs with mega salaries, bonuses and stock options. Together, Old Money and New Money people make up the richest 1% in the U.S, the Ultra-Rich.
The wealth of the New Rich is growing faster than the Old Money. The inherited money, the Old Money, accounts for only 9% of the net worth of the Ultra-Rich and, as a percentage of total wealth, it’s shrinking fast. The New Rich came from all walks of life, but they got most of their money from their businesses and stocks.
And the new rich are growing richer. In 1985 there were only 13 billionaires in the world. Now, there are more than 400.
I am opposed to millionaires, but it would be dangerous to offer me the position. – Mark Twain
The Money Gap
The ultra-rich are known as conspicuous spenders. That’s not the case in societies where wealth is distributed more equally. If most people make roughly the same income, people do not obsess over material goods. When everyone can afford to buy what’s available, possessions lose their significance as status symbols. But inequality changes this outlook. The more wealth is concentrated in a privileged few, the more important consumer goods become. The wider the income gap becomes, the more goods are available only to the rich. In unequal societies, possessions identify those who have succeeded and those who have not. You are judged by what you own, by what you consume, not who you are.
Medium-sized mansions, homes between 5,000 and 10,000 square feet, cost their owners about $650,000 per year to maintain, over and above the purchase price. That includes the cost of nannies, housekeepers, a personal assistant, and a household manager. But homes of 10,000 sq. ft. are not large enough. The Ultra-Rich must have 50,000 sq. ft. A mansion that measures over 30,000 square feet will run up annual maintenance bills of at least $3 million. Its upkeep requires 10 butlers, 12 laundresses, 20 security personnel, and 30 housekeepers. It’s taking more and more people to run the lives of high net-worth individuals.
Cars for the Living Rich Lifestyle
The Ultra-Rich want unique cars that they don’t see on every street. Mercedes offers the Maybach; 20 feet long and $358,000, it can reach top speed of 155 mph. The Bentley Continental at $150,000 is also popular with the New Rich. There are the second tier luxury cars, BMW and Jaguar, for people who don’t want to look conspicuous. Why let the chauffeur have all the fun, folks? Drive it yourself!
Hobbies for the Rich and Restless
If the Ultra-Rich don’t feel compelled to work at a job, they spend time on hobbies. Collecting art is popular among the rich 1%, even for those who don’t know art from cartoons. Art looks good in the living room and in the portfolio. They buy art on the basis of brand names, like Picasso, Manet, or Andy Warhol.
But the supply of Picasso’s and old masters is limited. There are so many rich people chasing the same paintings, that prices are escalating at Sotheby’s and Christie’s auctions of fine art. Jackson Pollock’s drip paintings go for $50 million each. The Gustav Klimt painting of a German woman Adele Bloch-Bauer went for $135 million in 2006 to the lucky buyer, cosmetics magnate Ron Lauder. Prices are reaching for the stratosphere as the Ultra-Rich become art collectors.
Shopping Lifestyles of the Rich and Restless
The fever for luxury goods is contagious among the Ultra-Rich. There’s a luxury designer store in Sao Paulo, Brazil, called Daslu. Customers arrive by helicopter and are driven in golf carts across the marble floors of the store. Meanwhile, the average worker in Brazil takes home wages of $200 a month.
Watches have become a status symbol for the 1% club. Any $40 Timex will give you the time. But the Franck Muller timepiece, a select, handmade Swiss watch, is the most desirable brand. It sells between $5,000 and $600,000, and still has to be wound every day. The Muller model called Crazy Hours shows the numbers in a random arrangement around the watch face, which gets you a lot of attention for only $20,000. The 1% Club turn up their noses at plebian consumer brands like Rolex, Cartier and Breguet, so I’ve been told.
Who Are the Ultra-Rich?
You can find their names on the Forbes magazine annual list of the 400 richest Americans. Bill Gates of Microsoft and Warren Buffet of Berkshire Hathaway are usually numbers 1 and 2 on the list. Larry Ellison, founder of Oracle, is number four on the Forbes list of richest Americans. Google billionaires Sergey Brin and Larry Page are in the top ten. Investor Kirk Kerkorian, who owns a chunk of the MGM Mirage casino, is near the top of the list. Michael Dell of Dell Computers is number eight.
The youngest member of the Forbes 400 this year is 33-year-old John Arnold, a former Enron trader who became a billionaire running the hedge fund Centaurus Energy.
Every day I get up and look through the Forbes list of the richest people in America. If I'm not there, I go to work. – Robert Orben
Outrageous Lifestyles of the Rich, Wealthy and Restless
- They throw parties with extravagant decorations, like the birthday party for Tyco CEO Dennis Kozlowski which featured Michelangelo’s David as an ice sculpture, with a fountain of vodka spouting from between his legs.
- They learn that it costs $60,000 to fix a broken windshield in the personal jet airplane.
- They hire nannies to raise the children, while they accumulate homes in Palm Beach, Nantucket, Sun Valley and the Pocono Mountains.
- They raise swans on the landscaped pond, and hope that the foxes don’t eat them.
- They gossip and brag. A favorite saying among the Ultra-Rich is, “The first billion is the hardest. The second one was pretty easy.”
- They employ maids, security guards, spa staff, kitchen staff and nannies, as well as managers. A large property requires maybe 100 employees, but they usually don’t keep count.
- They own a jet airplane or two, maybe a Gulfstream 550, and maybe a yacht and some water toys. During peak times of the year, their private jets cause congestion at airports in Aspen and Teterboro,.
- They buy $320,000 cars like the Rolls-Royce Phantom on an impulse.
- They vacation in exotic locales around the world, flying to St. Andrews, Scotland, for golf, a lodge in Wyoming for trout-fishing, a private island in Turks and Caicos, or a resort in Tahiti. They know their way around the world the way you and I know our way to the grocery store.
- They are most comfortable around other rich people. When everyone around you is wealthy, you don’t have to feel guilty about overdoing the excess.
- They belong to social clubs that charge up to half a million for a membership.
- They join ski clubs in Montana where you never have to wait in lines for the lift. They play golf on courses where tee times are unheard-of.
Said one of these privileged Ultra-Rich, “Well, I do think it’s excessive. It is absolutely excessive. No question about it. But it’s amazing what you can get used to.”
We live by the Golden Rule. Those who have the gold make the rules. – Buzzie Bavasi
A Yacht is Just a Symbol and Size Does Matter
The New Rich often got their money by being hyper-competitive. And they remain that way, as they try to outdo each other with outrageous ways to spend their wealth. They compete for bragging rights by buying mega-sized yachts. The larger yachts are equipped to carry a half-dozen cars, a helicopter, a few motorcycles, as well as a decompression chamber for the divers, a walk-in freezer, a gym and night-vision cameras. If they have a sailboat, they’ll carry it on their 300-foot motor yacht. A more eccentric owner has equipped the yacht with a swimming pool, a basketball court, a 12-person Jacuzzi, a Roman bath, a tank of piranhas, bronze cannons, and a music studio. The private submarine is launched from its docking station on the lower deck.
If the Ultra-Rich want to rent a yacht, the better charters go for $800,000 a week.
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 container ships and rusty cranes.
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.
----- Surfer Sam
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