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THIRTY-EIGHT

BILLIONAIRE BORROWING

Ever hear the saying that the richer you are, the less you spend?  And this is how it works. Often, the more wealth people accumulate, the less they spend. You see, the rules change as you climb the ladder. I heard an interesting term being thrown around on the Forbes billionaire recap for the end of the year, “billionaire borrowing.” This is a term used to express a situation when a billionaire PLEDGES their stake in a company as leverage for a PERSONAL loan. Here's how it works: say a billionaire has hundreds of millions in a stock, say Tesla, he doesn’t have to sell it, which means he doesn’t have to pay capital gains tax. AND he doesn’t lose his stake or potential earnings. YET, the banks will take this as security to provide a personal loan. So essentially, he is given money without having to sacrifice ANYTHING. It's a WIN WIN WIN WIN for him. Isn’t that interesting?  

There is a caveat, though. If the pledge stock drops, there can be a “margin call,” and the lender can demand further collateral to sustain the standing loan. This ties directly back to my concept that there is no competition at the top. The higher you make it, the easier the game gets. Period. The rules quite literally change. Equality may be the theme of the century, but it is not reality. I do not assign this a positive or negative connotation. It is simply a fact. 

The rules are different for those at the top. Sitting back and hating the game or blaming those who have figured out how to play it isn’t going to get you where you want. Instead, absorb the above lesson. The higher you go, the easier it gets. It’s easier to get to the top, even though it’s hard to level up there because of the people and systems that will try to hold you back on the previous level.

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