billionaires

Here's How Billionaires Are Preparing for the End of the World

Emily Guy Birken — Mon, 02 Jul 2018 08:00:10 +0000

Theoretically, a zombie apocalypse (or another, more likely doomsday event) could be a great equalizer. When the dead are walking in search of fresh brains, billionaires and burger-flippers alike will be boarding up windows and pushing heavy furniture against doors. After all, no matter how much money you have, it’s impossible to completely insulate yourself against true end-of-the-world scenarios.

However, that kind of thinking underestimates the paranoia — er, preparation — of the world’s wealthiest individuals. These multimillionaires and billionaires have enough money to buy themselves a kind of apocalypse insurance for when things go sideways. This means that whether the world ends in fire or in ice, billionaire preppers will be able to ride things out in comfort from one of these locations. (See also: The High Cost of Planning for the End of the World)

1. Panic rooms

These secluded rooms in wealthy homes are designed as a safe place to wait out any number of dangers, from burglars, stalkers, or other intruders, to natural disasters or nuclear fallout. Panic rooms are often disguised behind fake bookshelves or walls or are otherwise hidden, and they have security features like password or thumbprint authorization to make sure only recognized individuals can get in, as well as Kevlar lining, infrared surveillance, and an escape tunnel.

These rooms may have once been nothing more than secure places to wait out a siege or disaster, a la the bare-bones panic room where Jodie Foster and Kristen Stewart hide in the 2002 film. But these days, one-percenters who would like to have a safe hiding place in case of an actual Purge expect more luxurious amenities, such as sleeping quarters and autonomous air-filtration systems, to help them stay put for some time.

While many high-end homes come already equipped with these safe spaces, there is a thriving panic room installation industry. It can cost up to half a million dollars to install such a room, although many who do so feel that the peace of mind is worth the money.

2. Island real estate

Depending on the type of doomsday scenario, getting the heck away from major metropolitan areas may be enough to protect a worried billionaire from nuclear radiation, natural disasters, global pandemics, and even pitchfork-wielding mobs. This is why many international billionaires have been purchasing homes and land in New Zealand, including Peter Thiel, founder of PayPal, director James Cameron, and billionaire hedge-fund pioneer Julian Robertson.

Not only is this scenic (and remote) island nation unlikely to be hit by a nuclear attack, but it could potentially be self sufficient in the event of a global apocalypse, and it has a great deal of inaccessible land up for grabs to any billionaire who can afford it.

Though New Zealand has become a "nudge, wink" for apocalypse insurance in Silicon Valley according to LinkedIn founder Reid Hoffman, some American billionaires want an island paradise a little closer to home for bugging out. Oracle founder Larry Ellison now owns 98 percent of the Hawaiian island Lanai, while Facebook creator and CEO Mark Zuckerberg purchased a 700-acre estate in Hawaii.

All of these purchases could simply be vacation homes, but since Hawaii also offers much of the same kind of protection via remoteness that New Zealand does, there is speculation that Ellison and Zuck (and the myriad billionaires who have purchased Kiwi property) may also plan on using these homes as bolt-holes in case of emergency.

3. The Oppidum complex

For the billionaire who wants to bring dozens of her closest friends and family (as well as quite a bit of staff) to the end of the world with her, the Oppidum complex in the mountains of the Czech Republic may be the perfect place to wait out the return to normalcy. This 323,000 square foot nuclear shelter has been described as the "largest billionaire bunker in the world," and it features amenities including a gym and spa, swimming pools, a movie theater, a library, offices and conference rooms, an underground garden with simulated natural light, and even a vault for your most prized possessions.

Construction of this bunker began back in 1984, as a joint project between the Soviets and the Czech Republic during the Cold War. Its geographical location, as well as its sturdy construction, make it the perfect place to wait out pretty much any kind of disaster that might kill off the rest of the planet. Nestled within the Oppidum, the bunker’s owner (and family, and friend, and staff) can survive a nuclear attack for up to 10 years without any external supplies. And in luxury, to boot.

The Oppidum is currently for sale, and the mind reels at the possible price tag — which is not listed. This is one of those situations where if you have to ask how much it costs, you can’t afford it.

4. Atlas Survival Condo

This multistory condo in Kansas is built in an old Atlas missile silo, and offers 14 homes for well-off preppers who hope to ride out doomsday within a community of like-minded folks. These homes range in size from smaller "houses" to large apartments that take up an entire floor of the silo, and cost anywhere between $1.5 million and $3 million.

The Survival Condo can support up to 70 people indefinitely, and all 14 housing units have already been sold. This is also one of the few luxury bunkers that allows pets — provided they are under 70 pounds.

The communal areas include a swimming pool, a general store, and even classrooms. (Sorry Junior and Sis, the end of the world will not get you out of going to school). It is not clear who will be staffing either the store or the classrooms, however, so the quality of service and education may be spotty once you get there.

The Survival Condo takes the possibility of intruders seriously, and includes an electric fence, an armory, and even a sniper post — so zombies will certainly not be able to breach the perimeter, no matter how hard they shamble in the Condo’s direction.

5. Vivos

The Vivos Global Shelter Network has created luxury bunkers in multiple locations, including one in Indiana, one in South Dakota, and its flagship bunker, the Vivos Europa One in Rothenstein, Germany.

Billionaires hoping to avoid rubbing post-apocalyptic shoulders with the proletariat may want to avoid the American Vivos shelters, since space in those shelters costs as little as $7,500 for a shared bunker and $25,000 to $35,000 for private bunkers. The Europa One shelter is where the luxury is truly at — although buying an apartment there is by invitation only.

Vivos does not advertise the cost per apartment in the Rothenstein bunker, but the entire property is worth approximately $1.1 billion, and can house about 500 people. Residents will enjoy multiple swimming pools, movie theaters, gyms, and restaurants, and each 2,500 square foot apartment is built to the resident’s specifications. The common areas include a hospital, bakery, and even a detention center, although it is unclear who might need to be detained or who might do the detaining.

The shelter can withstand a nuclear blast, chemical agents, an earthquake, or a tsunami without ruining your day. It also offers a self-contained water system and a power generation system, as well as climate, ventilation, air filtration, and communication systems.

Billionaires bugging out

It’s unlikely that the billionaires preparing for the end of the world will get a chance to laugh all the way to the bunker. It’s far more probable that these luxury bunkers will go unused and become a symbol of this generation’s misspent wealth.

However, those of us who will never afford a luxury home (above or below ground) can take a lesson from these bunkers: It may be responsible to anticipate how things could go wrong, but it’s silly to plan for the worst as if it is inevitable.

That’s how you end up with an unused underground Versailles with multiple swimming pools.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Characteristics of the World's Youngest Billionaires

Rachel Slifka — Wed, 18 Apr 2018 09:00:07 +0000

According to Forbes, there are 2,208 billionaires in the world today. And just 63 members of this elite group are under the age of 40.

Though the 63 youngest billionaires are a diverse group of individuals with different claims to fame, they do have quite a few things in common. Here are a few characteristics shared by some of the world's youngest billionaires.

1. More than half are entrepreneurs

Over half the billionaires on the under-40 list are self-made, with a majority being in the tech industry. Of course, people like Mark Zuckerberg of Facebook and Evan Spiegel of Snapchat made the list. So did the founders of Airbnb, Stripe, Uber, among others. But tech isn't the only profitable industry. Several of the billionaires on the list are from manufacturing, design, and medical industries.

2. Inheritance is prevalent

Not all of the world's most wealthy pulled themselves up by their bootstraps. While many of the world's youngest billionaires were self-made, there are also many who inherited their wealth.

Twenty-four-year-old Gustav Magnar Witzøe, heir of Norwegian fish farming company Salmar, amassed a net worth of $1.9 billion after inheriting nearly half the company from his father. Heiress Yang Huiyan is worth over $21.9 billion at only 36 years old after inheriting her father's real estate development company in China. And Norwegian sisters Alexandra and Katharina Andresen — just 21 and 22 years old, respectively — each inherited 42 percent of their family-owned investment company, Ferd, for a net worth of $1.4 billion a piece.

3. Many of them left school to pursue their businesses

School was not the end game for many of the world's youngest billionaires; their business was.

While enrolled in a product design class at Stanford, Evan Spiegel came up with the idea of Snapchat. In 2012, he officially dropped out of Stanford to focus on his growing app. Mark Zuckerberg dropped out of Harvard in 2005 to manage the ever-growing Facebook. Even some of the world's more established billionaires, such as Steve Jobs and Bill Gates, all dropped out of school before they graduated.

This isn't to say dropping out of school to pursue a business is the secret to their success: Many billionaires on the list hold at least a bachelor's degree. (See also: 5 Jobs That Pay Over $50K and Don't Require a Bachelor's Degree)

4. They have multiple successful businesses

The world's wealthiest often have more than one claim to fame. In fact, many of the youngest billionaires have worked on several notable and profitable projects on their rise to success.

Garrett Camp, mostly known as the billionaire founder of Uber, was well on the tech scene before he even started the rideshare company. He actually was the founder of StumbleUpon, which he sold to eBay in 2007 for $75 million.

Facebook's third employee, Dustin Moskovitz, worked with Zuckerberg to launch Facebook out of their dorm room at Harvard. After they both dropped out of college, Moskovitz moved to California with Zuckerberg to focus on further developing Facebook. In 2008, Moskovitz left Facebook to start Asana, a project management software — though most of his $12.4 billion net worth comes from his small remaining stake in Facebook. (See also: What Small Business Owners Can Learn From Top Forbes Entrepreneurs)

5. They prioritize hobbies

Norwegian heiresses Alexandra and Katharina Andresen spend most of their time riding horses competitively. Airbnb billionaire Brian Chesky was a former bodybuilder, and 27-year-old Stripe founder Jack Collison prefers to spend his spare time running — a hobby we can all afford.

While many of these billionaires spend a majority of their time overseeing extravagant business operations, they still value taking time for their own interests and hobbies. That's something we should all take to heart.

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This article is from Rachel Slifka of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Think Like a Billionaire When You’re Broke

Paul Michael — Wed, 24 May 2017 08:00:08 +0000

It’s not easy being broke. As of 2014, there were almost 47 million Americans living below the poverty line. That’s roughly 15 percent of the population.

To simply tell these people to "start thinking like a billionaire" may seem tone deaf, or even cruel. But it actually is great advice. Millionaires and billionaires, especially those who are self-made, tend to think in a completely different way. It all comes down to a different view of the world. And it’s time to embrace that mindset.

Don't think about the money you don’t have

To illustrate this point, consider the test Dr. Tina Seelig gave her Stanford University students. She challenged them to make as much money as possible in two hours using only $5 of "seed funding" tucked in an envelope. Working in teams, they could spend as many hours as they wanted planning, but once they tore open the envelope, the clock started ticking. The most successful results came from the teams that realized a very important part of the test — namely, that the $5 was a red herring.

Concentrating on the small sum of money put them in a box, so they ignored it, and instead looked at ways to make money from scratch. Some of the ideas were incredible. One team made $650 by selling their time; they sold their three-minute presentation slot to a firm looking to recruit students in the class. Brilliant. Now that’s how a billionaire thinks — looking at the opportunity, not the handicap.

The lesson here is that the money you do not have right now should not, in any way, hold you back. If you don’t have funds, find a way to use what you do have to make money. What can you sell? Is it your time? Is it knowledge? Is it a service? The lack of money in your account should not place a limit on your ideas.

Never say "I can’t afford it." Instead ask "How can I afford it?"

You may have heard it often growing up. "Dad, can I get a new bike?" "No, we can’t afford it." That’s how poor and middle class people often think. They look at their current financial situation, and make a quick calculation. But that’s the wrong approach.

If you need something, or your kid wants something that isn’t just a frivolous whim, don’t automatically say, "No, we can’t afford it." Instead, counter with a question. Namely, "OK … how can we afford that?"

Maybe it’s a new stove, or replacing the old, worn-out car. If you immediately shut down the possibility, you’ll never get it. A billionaire doesn’t place these limits on ideas or dreams. They look into funding sources, ways to create capital, and many other money-generating avenues. And we’re not talking about pulling out your credit card for something you can’t afford and don’t need.

For necessities — or important dreams — it doesn’t matter if the object in question costs $100 or $100,000,000. The process is still the same. How can you afford that? What can you do to make it happen? Start thinking. (See also: How to Come Up With $1,000 in the Next 30 Days)

See change as opportunity

Most of us are afraid of a major life change, be it a job loss, financial obligation, or a move to another state. These are stressful and difficult situations. But a billionaire sees any kind of change, even those most of us would consider negative, as an opportunity.

If it’s a job loss, it has created a glut of free time to use for a new venture. What can you do with that time that could create money in new and exciting ways? Think back to those college students with the $5 challenge. Some of them decided to make money waiting in line for people. They were making $20 a shot. Considering the minimum wage is currently $7.25, that’s almost three times the amount for literally doing nothing.

Fear of change is natural. But fear is a negative response to any situation, and in the long run, it will cripple your thinking and your ability to bounce back. Whatever the situation, take control and think positively. How can you turn it to your advantage? What do you have now that you did not have before this major event happened? Then, run with it.

Every penny saved is a penny earned

Billionaires do not blow money. People have this idea, which comes from a select few who hog the limelight, that the superrich are super wasteful. But they did not become rich by throwing money away.

There is a now infamous anecdote about a billionaire who went into a New York bank asking for a $5,000 loan, and put his Bentley up as collateral. It was approved, and the bank employee parked the car in their underground garage. Two weeks later, the man returned from vacation, and paid back the $5,000, plus the $15.41 it accrued in interest. When asked why he, a rich man, would require such a small loan, he replied "Where else could I have parked my car in New York City for two weeks, for only $15?!"

The story isn't real, but the strategy definitely is. This is how a billionaire would actually think about such a situation. Sure, they can afford the finest parking in the city, but why pay through the nose for it when they can get it for almost nothing?

You can think the same way. What are you paying for, right now, that could be reduced in cost? What ways are there to save money on everyday purchases? From extreme couponing, to haggling and bartering, you have many options available to you.

Time really is money

Donald Trump once stated that he never wastes time. Even when he’s on the golf course, he’s doing business. He sleeps as little as possible, because every moment he’s awake is an opportunity to make money or create something.

Look at the ways you spend your time, and see how it can be maximized to work for you. If you’re on the bus going to work, are you staring out of the window, or reading a book that could teach you a new skill? Do you have hobbies that are productive?

Even playing video games can make you a small fortune, if you record yourself playing and post the videos to YouTube and Twitch. Indeed, the average "pro-streamer" makes between $3,000–$5,000 per month from 40 hours per week of game time. Think about that. They are literally being paid a living wage to play video games. Something that many people believe to be a waste of time has been turned into an income stream.

Consider every detail

It’s been said that billionaires look at the bigger picture. It's often called "the 30,000 foot view," which basically means seeing the layout, but not the houses, driveways, and storefronts. This is, in fact, the complete opposite of how a successful business operator thinks. Yes, the big picture is important at the get-go. But the details are what drives the success or failure of a venture. Often, it’s a small detail that was overlooked that causes something to fail.

Look at your own budget, and lifestyle, with that same eye for details. Are you paying $1 too much for something, especially a monthly bill? Did you examine the contract for your lease? Is there something in it that gives you a chance to save money? Did you get every deal you were supposed to get at the grocery store? Check the receipt.

Back in 2005, a software company hid a $1,000 prize in the terms and conditions of its user agreement. It took five months, and over 3,000 sales, before someone actually read the agreement and claimed the money. Details count. Pay attention to them, and you could see incremental changes that really start to add up.

Remember, billionaires and millionaires may live extravagant lives, but don't let that stop you from thinking the same way they do. It will make you wealthier in the process.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Beloved Books of Successful Millionaires

Paul Michael — Fri, 21 Apr 2017 09:00:11 +0000

If you are what you read, then the books that the super-rich have on their bookshelves should be of interest to all of us. From entrepreneurs and media tycoons, to international superstars and the President himself, here are 10 books that should be required reading for anyone looking to improve their lives.

1. Mark Cuban — The Fountainhead by Ayn Rand

A billionaire entrepreneur and a star of the hit series Shark Tank, Mark Cuban loves this book so much, he named his yacht after it. The author, Ayn Rand, is a polarizing figure in politics, and her books and life views are often adopted by both right-wing and libertarian politicians. Her basic philosophy revolves around the power of the individual, with the pursuit of happiness being the moral purpose of life.

The Fountainhead, first published in 1943, offered the world Rand's philosophy of Objectivism. The story, which centers on a young architect who battles against conventional standards, has become a classic of modern literature. Speaking of the book to C-Span, Cuban said, "You know it's funny because I'll pick it up when I need motivation, but then if I read too far, I get too much motivation and I get too jittery so I have to put it down."

If a book can continue to give a multibillionaire goose bumps, it has to be worth a read.

2. Jeff Bezos — The Remains of the Day by Kazuo Ishiguro

Amazon founder and CEO Jeff Bezos has a net worth of over $73 billion. So, it's perhaps a little surprising that his favorite book, Kazuo Ishiguro's The Remains of the Day, revolves around the life of a servant. In this case, that servant is an English butler called Stevens, who narrates the novel.

Set in postwar England, the elderly butler must come to terms with some pivotal issues from his past, whilst maintaining his stoic and "correct" behavior. In 1993, the book was turned into a beautiful film featuring Sir Anthony Hopkins and Emma Thompson.

Speaking about the book, Bezos said, "You can't help but come away and think, I just spent 10 hours living an alternate life and I learned something about life and about regret." Awarded the Man Booker Prize for Fiction in 1989, The Remains of the Day was included in The Guardian's "Books You Can't Live Without" list.

3. Mark Zuckerberg — The Aeneid by Virgil

Written between 28 and 19 BC, The Aeneid recounts the legendary story of Aeneas, a Trojan who traveled to Italy and became an ancestor of the Romans. From his journey from Troy, to the Trojan War, the funeral games, and a vision of the underworld, The Aeneid is widely regarded as a classic of Italian literature. What's more, the entire book is actually a poem, consisting of 9,896 lines in dactylic hexameter.

So how did Mark Zuckerberg, a young tech-savvy entrepreneur who created the social media climate we now live in, come to read the book? He was introduced to it while studying Latin in high school, and says the book "knows no boundaries in time and greatness." He is also known to quote lines from The Aeneid in Facebook meetings.

4. Oprah Winfrey — To Kill a Mockingbird by Harper Lee

If you ever needed an excuse to read this masterpiece of American literature, knowing it's Oprah Winfrey's favorite book is a doozy. Set in Alabama during the Depression, "To Kill a Mockingbird" covers three years in the life of Scout Finch, an eight-year-old girl, her brother Jem, and their father Atticus, a defense lawyer. Atticus is called upon to defend Tom Robinson, a young black man accused of raping a white woman.

Told through Scout's eyes, it's a compassionate and moving story of kindness, cruelty, and the roots of human behavior. "I remember reading this book and then going to class and not being able to shut up about it," Oprah told The Baltimore Sun. "I read it in eighth or ninth grade, and I was trying to push the book off on other kids. So it makes sense to me that now I have a book club, because I have been doing that since probably this book."

5. Elon Musk — The Foundation Trilogy by Isaac Asimov

The founder and CEO of Space Exploration Technologies Corp is bringing the ideas of the future into the present day, with award-winning electric cars and whole-home solar power. To discover that his favorite book series comes from noted science fiction author Isaac Asimov hardly raises an eyebrow.

The The Foundation Trilogy series revolves around mathematician Hari Seldon, who has spent his whole life developing a branch of mathematics known as psychohistory. Using the laws of mass action, the science is able to predict the future on a grand scale. Unfortunately, it predicts the fall of the Galactic Empire, and a dark age lasting 30,000 years before the second great empire arises.

Musk says, "The lessons of history would suggest that civilizations move in cycles … there could be some series of events that cause technology levels to decline." The book series has had a profound effect on the way Musk thinks about the world.

6. Bill Gates — The Catcher in the Rye by J.D. Salinger

Set in the 1950s, The Catcher in the Rye is narrated by a 16-year-old boy named Holden Caulfield, who is undergoing treatment in a mental institution. He recounts the tale of two days in his life when all this "madman stuff" happened to him. But there is a deeper meaning here, as we see him battle with issues around growing up, and avoiding the pressures of adulthood.

"It's my favorite book," said Gates. "It acknowledges that young people are a little confused, but can be smart, and see things that adults don't."

7. Michael Bloomberg — The Honourable Schoolboy by John Le Carré

John Le Carré is a highly-regarded author of espionage novels, and has written such classics as The Spy Who Came in From the Cold, Tinker Tailor Soldier Spy, and The Constant Gardener. However, it his one of his lesser known works that captured the imagination of Bloomberg.

The Honourable Schoolboy tells the story of George Smiley, who must reconstruct an intelligence service and run a successful offensive espionage operation. It is the second novel in an omnibus featuring Smiley, and in 1983 it was adapted for a BBC Radio production featuring Martin Jarvis.

"It's 600 pages, it's mostly description, there is almost nothing that happens. But it's fascinating," said Bloomberg. Reading 600 pages of fascinating nothingness? Sounds like fun.

8. Richard Branson — Stalingrad: The Fateful Siege 1942–1943 by Antony Beevor

Founder of the highly successful Virgin brand, Richard Branson includes Peter Pan, Wild Swans, and Swallows and Amazons in his list of favorite books. As such, a book about World War II's most harrowing battle seems a little out of place in that company.

The year is August 1942, and Hitler's huge Sixth Army reached the city that bore Stalin's name. Over the five months that followed, the battle for the ruins of the city cost more than a million lives. More than just a pure account of the battle, Stalingrad: The Fateful Siege 1942–1943 recounts the personal experiences of soldiers on both sides, and includes tales of interrogation, desertion, and execution.

9. Beyoncé — What Will It Take to Make a Woman President? by Marianne Schnall

There aren't many people in America, or the world, who don't know of Beyoncé. The multi-Grammy winning singer and actress has amassed millions from her albums, concerts, perfume lines, clothing, and films.

Schnall penned What Will It Take to Make a Woman President? after a question was brought up by her 8-year-old daughter: "Why haven't we ever had a woman president?" It was a question she did not know how to answer, and so she set about asking the likes of Sheryl Sandberg, Maya Angelou, Gloria Steinem, Nancy Pelosi, Nicholas Kristof, and Melissa Etheridge.

"It's a collection of interviews and essays by great women," says Beyoncé. "They will inspire you to become a better leader."

10. President Trump — The Power of Positive Thinking by Norman Vincent Peale

Love him or hate him, he's the 45th President of the Unites States, and a very wealthy man. Some say that he's not much of a reader these days, but he has stated that this book had a profound effect on him and his business empire.

The international best seller by Norman Vincent Peale speaks of faith, spirituality, and the power of the mind to drive you forward. Via simple, prayerful exercises that you do daily, you can eliminate all the negative thoughts that prevent you from achieving the happiness and success you deserve.

President Trump read The Power of Positive Thinking when he was billions of dollars in debt, and it turned his life around. "My father was friends with Dr. Norman Vincent Peale, and I had read his famous book, The Power of Positive Thinking," said Trump. "I refused to be sucked into negative thinking on any level, even when the indications weren't great. That was a good lesson because I emerged on a very victorious level." Victorious indeed, considering he is now the most powerful man in the world.

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Are Hedge Funds, Anyway?

Brittany Lyte — Mon, 13 Jun 2016 09:30:18 +0000

Few of us have the savvy — or the scratch — to invest in hedge funds, but they are still key players in the world of investing. So, what are they, and why do they matter?

Here's the long and short of it: A hedge fund is a limited partnership of investors that uses advanced (often risky) methods, such as investing with borrowed money, in an attempt to realize large gains. They matter because they are a $3.2 trillion dollar industry. Anything that huge has the potential to make big waves in the global economy — for better or for worse.

Less Gamble, More Skill

Most hedge funds are, by design, limited partnerships. The hedge fund management group functions as the general partner, while third party investors, such as uber-wealthy individuals and banks and institutional investors, serve as limited partners.

It shakes out like this: The hedge fund management group invests the limited partner's pooled monies using a variety of clever tactics aimed at realizing big returns. Rather than solely relying on the movement of the stock market, however, profits are made due to the manager's skill.

The hedge fund was born out of the desire of large investment companies to mitigate market risks through exposure to alternative assets. For example, if the market were to take a dramatic plunge, hedge funds could minimize their losses by investing in assets that perform well in such an economic rut.

Hedge fund managers use a diverse set of investment vehicles, including investments in debt, stocks, bonds, commodities, and complex derivatives. Some hedge funds buy up shares in businesses, invest in crude oil, spend on collectables such as valuable art, or flip real estate. Sometimes a manager bets on these things, while at other times he or she might bet against them. In all cases, these investments are bought and sold to maximize returns.

Notably, most people don't qualify to invest in a hedge fund. Only those individuals who have an annual income above $200,000 or a net worth that tops $1 million, excluding a primary residence, can join as a limited partner. Many folks who meet these thresholds, however, might balk at the fees. Hedge funds typically charge limited partners about 20% of all gains and about 2% of assets.

Hedge Funds Are Big Business

Originally, hedge funds were almost exclusively the province of the uber-wealthy, but institutional investors have also been increasingly using hedge funds in the last 15 years. Many public pension funds, banks, endowments, and trusts now invest in hedge funds. The industry is ballooning, growing by more than $70 billion in 2015.

A whopping 60% of all hedge fund managers are based in North America, where New York City and Connecticut lead the way. Europe has 19% of the world's hedge fund managers, with the majority located in the UK. Asia-Pacific hedge fund managers constitute 17% of all firms within the industry, with major hubs in Hong Kong, Singapore, and Australia.

All this is to say that the hedge fund industry is big, it's global, and it has the potential to make investors huge gains in a short amount of time. Interestingly, the act of "hedging," which lends the industry its name, refers the minimization of risk. However, the aim of just about any hedge fund is to maximize returns on investment. And that usually requires relatively risky investment strategies.

Hedge Funds Today

Last year turned out to be a tough year for hedge funds, despite the fact that the industry made gains during the first five months of 2015. That winning streak was sharply reversed by four months of losses from June to September, the longest losing streak for hedge funds since 2008. Some of the best-known names in the industry lost their investors billions of dollars. Global events including declining oil prices, the collapse of commodity prices, and the Greek debt crisis are partially to blame.

Despite the industry's lackluster performance of late, the top hedge fund managers continue to take home billions of dollars. The 25 top-paid hedge fund managers earned a collective $13 billion in income last year, according to an annual ranking. Some of these top earners actually lost money for investors, but still personally profited.

Also notable is that David Tepper, the hedge fund billionaire behind Institutional Investor's Alpha, put the entire New Jersey state budget in peril this year when he moved out of the state to Florida, taking his hedge fund headquarters with him. Tax experts say his relocation could cost New Jersey hundreds of millions of dollars in lost payments.

It's just another example of how this powerful industry can affect all of us.

Anything we've missed? What are hedge funds, anyway?

This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The 5 Cities the Most Billionaires Call Home

Brittany Lyte — Thu, 24 Dec 2015 12:00:03 +0000

Lured by favorable tax laws and fantastic views, the richest of the rich choose their backyards with precision. Read on for our roundup of some of the most popular locales for the luxe — and why so many of the globe's elite choose to call them home. (See also: 8 Jaw-Dropping Tax Havens of the Filthy Rich)

1. Moscow

More than 80% of Russia's 68 billionaires reside in the sprawling country's capital, making Moscow a mecca of wealth. The city center is dominated by gold-domed architecture, pricey eateries, and luxe hotels. Home of the Kremlin and some of the world's most exquisite ballet, Moscow offers impressive city parks, unique urban promenades, and a nightlife scene that rivals that of New York. Moscow is also full of culinary treats. Consider your visit incomplete until you've sampled the perogies and borscht.

2. Zurich

The average price of a pair of blue jeans in this Swiss banking hub is a staggering $156. Need we say more? Millionaires account for an astounding 27% of the population, pushing the price of everyday items like jeans nearly out of reach for everyone else. The city itself is concentrated on a fairly small footprint surrounded by mountains, rolling hills, and other feats of nature. It's entirely possible to spend the morning exploring city streets and art galleries, and then enjoy an afternoon hike alongside a serene lake or river.

3. Monaco

This city-state on the sea is the most likely place you'll bump into a millionaire. And with its posh casinos, glamorous hotels, and yacht-lined harbors, it's really no surprise. Monaco is a major center of banking as well as tourism, but it is most widely associated with being the ultimate playground for the rich and famous. With nearly 38,000 residents stuffed into soaring high rises and regal estates along a small area of the French Riviera, it is the world's second smallest and most densely populated country — and one of its most legendary tax havens. Monaco does not charge its elite residents income taxes.

4. New York

One in every 22 New Yorkers is a millionaire. And with 78 billionaires, the Big Apple has more uber-rich residents than any other city in the world. Home of the Statue of Liberty, Wall Street, and the best pizza on the planet, New York is chock full of iconic people and places just waiting to be explored. New York is also the global center of industries ranging from fashion to finance. Luckily, there are lots of frugal ways to enjoy the City That Never Sleeps.

5. Stamford

This waterfront enclave in yankee Connecticut is called "the city that works." Clearly, you've got to work pretty hard to afford living here. Stamford has one of the highest concentrations of millionaire households in the nation, with housing costs at more than double the national average. But with its easy access to NYC, views of Long Island Sound, and a bustling downtown, Stamford is one of Connecticut's jewels. This city of 126,000 people boasts a lively bar scene, small theaters, and several live recording studios where episodes of legendary television shows are filmed. Brimming with hedge fund types, Stamford is also home of the largest trading floor in the world.

Have you visited any of these hangouts of the mega-wealthy?

This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Donald Trump's 5 Biggest Business Failures

Kyle James — Wed, 09 Sep 2015 13:00:19 +0000

While Donald Trump is currently enjoying success on the campaign trail for the Republican nomination for president in 2016, the ride hasn't always been smooth for the controversial billionaire. Over the years, he's had many ventures simply fail to catch on for a variety of reasons. Here are five of his biggest business failures — some of which you've probably never heard of.

1. Trump: The Game

In 1989, Trump launched a board game from Milton Bradley similar to the iconic Monopoly. The game was initially met with excitement, but in the end, the market spoke and loudly said, "No thanks." The game was simply titled "Trump: The Game" and while it tried to be a shorter version of Monopoly, critics found it to lack strategy and it shortly went away.

Then in 2004, on the heels of The Apprentice, a different version of the game resurfaced with the catchphrase "I'm Back and You're Fired!" on the cover of the box. The game was based on the bidding and winning of properties but it also never gained traction (some considered it quite boring to play), and thus was discontinued, as well.

2. Trump Vodka

When Trump launched his own Vodka product in 2006, it was a bit of a head scratcher due to his adamancy that he has never had a drink (he actually had a brother who died from an addiction to alcohol). While Trump Vodka had the very appropriate slogan of "Success Distilled," sales were very meager and he was unable to take significant market share away from Grey Goose and Absolut. Production of Trump Vodka was finally halted in 2011 due to a lack of sales.

3. Trump Airlines

From 1989 to 1992, Donald Trump was heavily involved in the airline industry with Trump Shuttle, Inc., better known as Trump Airlines. In 1989, Trump purchased the landing rights and many of the assets from the defunct Eastern Airlines and began hourly flights between New York City, Boston, and Washington D.C. The downfall of the business venture began when Trump began upgrading his fleet in an effort to become a "luxury" carrier. The interior of his Boeing 727s boasted gold-colored lavatory fixtures, chrome seat belts, and maple wood veneer throughout.

Naturally, Trump's ticket prices began rising and so did his financial troubles. Unfortunately for Trump, most of his core travelers could care less about the fancy upgrades and wanted the convenience of a budget regional airline more than the luxury aspects Trump was trying to grow. In the end, Trump Shuttle was never able to make a profit and his high debt-load eventually led to defaulted loans. By April of 1992, Trump Shuttle failed to exist when his creditors sold all remaining assets to US Airways.

4. Trump Casinos

Trump Entertainment Resorts, the company behind three Atlantic City hotels and casinos, two of which no longer exist, has filed more than a couple of bankruptcies as of 2014. Trump appears to be losing interest in Atlantic City, as his only current tie to the city is the Trump Taj Majal casino resort, which bears his name and likeness in exchange for stock in the company.

5. Trump University

Back in 2005, Trump founded Trump University, a non-accredited school designed to teach his investing strategies and techniques along with his real estate prowess. Things went okay until 2010, when four students came forward with a lawsuit claiming the school was nothing more than an extended infomercial with a constant upsell trying to get students to purchase additional seminars.

Trump University was subsequently renamed the "Trump Entrepreneur Initiative," and after that failed to gain traction, the university went away altogether in 2011. Trump is expected to be questioned in court this month stemming from the class action lawsuit brought on by the former students.

To be fair to "The Donald," he's had many incredibly successful business ventures including Trump Tower, The Apprentice, 40 Wall Street, and the Grand Hyatt Hotel in Manhattan. Whenever you take the number of business risks that Trump has taken over the years, there are inevitably going to be failures along the way. As with any successful investors, a few failures along the way simply demonstrate their tenacity.

Should Donald Trump's business failures be used as a gauge for his possible effectiveness as President of the United States?

This article is from Kyle James of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Self-Made Billionaires: Investment Lessons From Their Success

Julie Rains — Tue, 20 Aug 2013 09:48:32 +0000

According to Forbes, there are over 1,400 billionaires in the world. Sure, some of these folks inherited business empires from their parents. Many grew in wealth as they guided the development of small concerns into large publicly held companies, such as Microsoft, Oracle, and Google. Several acquired enterprises previously controlled by foreign governments and reaped benefits during periods of privatization. (See also: Business Lessons From the Builder of a Media-Entertainment Empire)

How-I-became-a-billionaire stories are intriguing. They typically involve recognition of market opportunities and willingness to take large risks along with disregard for popular opinion about their business practices and investing philosophies.

Common Behaviors of Self-Made Billionaires

What I find most compelling are the secrets of self-made billionaires who built wealth largely through personal investments. Looking at their stories, I identified attributes shared among these ultra-rich and conceivably replicable (in part) by a regular investor. (See also: 64 Funny, Inspiring and Stupid Money Quotes From Famous People)

Invest According to Value

I knew that Warren Buffett was a value investor, but it never occurred to me that so many other billionaires share this philosophy. For example, Graeme Hart, Suleiman Kerimov, and Seth Klarman also invest in distressed and unpopular companies.

They snag publicly-held shares when prices are low and acquire large stakes in privately-owned businesses that are troubled. Sometimes, they wait for market valuations to rise before cashing out. Generally, though, they increase value by revamping business operations, selling off underperforming assets, and restructuring finances to generate strong cash flow. (See also: Buy-and-Hold Investing: 4 Ways to Make It More Effective)

Buy or Build Companies With Other People's Money

These investors aren't afraid of borrowing money or orchestrating business acquisitions through financial leverage.

For example, Eli Broad co-founded homebuilder Kaufman & Broad (now KB Home) with a $25,000 loan from his in-laws. Similarly, Harold Simmons bought his first drug store with $5,000 in cash and a $95,000 loan, and later employed leveraged buyouts (LBOs) to buy undervalued businesses. Ira Rennert issued junk bonds to acquire struggling companies.

Make Fortunes on a Limited Number of Investments

Many billionaires make their initial fortunes in one or two major investments. They typically spend their early careers focused on developing a single business or type of investment.

For example, Simmons spent 13 years building his drugstore chain, which he sold to Eckerd Corporation for $50 million in 1973. Philip Anschutz accumulated wealth from oil-producing land that he purchased near the Utah-Wyoming border. Albert Frere amassed substantial holdings in Belgium's steel industry before launching an investment company. Peter Lim's investment in Wilmar, a palm oil company, was the source of his initial fortune.

Develop a Background in Finance, Accounting, or Economics

Most self-made investment billionaires studied or worked in financial realms. College courses taught them business basics, and first jobs provided insights into real-life financial practices. These foundations of knowledge later informed their investment philosophies and strategies.

Buffett learned value investing from Benjamin Graham, who is considered the author of this approach. Kerimov and Lim both studied accounting, and Hart began forming the concept of his business while completing his MBA. Both Lim and Buffett held jobs as stockbrokers, while Simmons worked as a bank examiner and banker.

Start Building Wealth at a Young Age

Many billionaires begin the process of building wealth in their 20s and 30s or earlier.

For example, Buffet and Lim purchased their first shares before turning 20, and Broad bought his first piece of real estate at 20 years old. Klarman was in his mid-20s when he started the Baupost Group, and Frere began accumulating steel-related companies at age 30. (See also: Getting Kids Started With the Stock Market)

Act Unfazed by Setbacks

Billionaires suffer occasional losses. But instead of withdrawing from the world's markets, they continue investing.

An extreme example is Kerimov. He lost billions after selling his Russian assets to buy shares of Morgan Stanley, Goldman Sachs, Deutsche Bank, and Credit Suisse in 2008, the year of a global financial crisis. To rebuild his wealth, he borrowed to invest in mining, real estate, and telecommunications. As of March 2013, his net worth is $7.5 billion.

Diversify Investments After Making a Fortune

Billionaires may get rich from one or two sources, but they diversify their assets after becoming wealthy. Many establish holding companies for a broad base of investment activities while others make acquisitions in more limited spheres.

Just as Buffett established Berkshire Hathaway as a holding company for a diverse portfolio of investments, Rennert started Renco Group; Hart, Rank Group; and Simmons, Valhi. Some still focus on a few key areas but are more broadly diversified than before. For example, Anschutz owns Xanterra, which provides hospitality services in national parks, and AEG, a sports and entertainment group that manages concert venues, musical artists, and more.

Learn more about specific investments for certain billionaires through iBillionaire (an iPhone app) and Forbes' real-time tracking of publicly held investments.

Lessons for the Regular Investor

What can a regular investor learn from these success stories?

Start building wealth with your first paycheck, whether earned from a side business or first job.
Don't be afraid to take risks, especially if you are young and have years to recover your wealth, but structure your finances so you'll always have cash flow to service debt.
Pursue opportunities for high returns, noticing that these may come from business deals requiring hands-on involvement as well as strong financial and operations leadership, not just typical investments on the open market.
Learn the basics of finance in order to evaluate opportunities and manage your portfolio. Note that you have a limited capacity for monitoring your investments so choose wisely (buying stock on low valuations).
Don't fret over setbacks; apply lessons learned on the next investment. Diversify as you accumulate wealth to protect from severe and sudden losses.
Finally, whether or not adopted by the masses or endorsed by the experts, if your investment approach delivers results over the long-term, stay the course.

What billionaire investors have you drawn investment inspiration from?

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This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: