Unlocking Wealth

As of 2023, there are 3,112 billionaires in the world. The perspective on life held by billionaires is quite different from anything you've ever experienced, and it goes against many of the things you believe. Today, we're going to delve into 15 secrets that only billionaires know. Welcome to Alux.com, the place where future billionaires come to get inspired.

Secret #1: Ownership Percentage vs. Total Control: You don't usually reach a billion dollars and still own 100% of your business. Take Jeff Bezos, for example. He owns 12.7% of Amazon, while Elon Musk owns 13% of Tesla. Most millionaires are overly protective of their shares, unknowingly hindering their own upward acceleration. Owning 15% of a multi-billion dollar pie is far more financially lucrative than owning 100% of a three-million-dollar business.

Secret #2: Real Estate and Private Equity: Real estate can make you a millionaire, but private equity can make you a billionaire. While real estate is often dubbed the "dumb millionaire's game," almost half of the net worth of millionaires (35% to 50%) is tied up in real estate. However, for billionaires, business interests and private equity make up over 70% of their net worth. Owning a business, expanding it, and using the funds to invest in other ventures is the most effective way to increase your net worth.

Secret #3: Using Other People's Money: You can earn your way to one million dollars using your own money, but to reach the billion-dollar mark, you need to leverage other people's money. Billionaires follow a simple strategy: they present their ideas to friends, family, banks, and angel investors, offering them a percentage of the company in return for financial support. By utilizing external funding, they can scale their businesses rapidly and achieve tremendous success.

Secret #4: Buy Low, Sell High: Everything in business is a "Buy Low, Sell High" equation. Billionaires engage in various trading activities, such as commodities, shipping, tech, and media companies. Regardless of the industry, the fundamental principle remains the same. Buy assets when their value is low, and sell them when the demand increases. Profits gained from these transactions can be reinvested to achieve even larger returns.

Secret #5: Art as a Preferred Store of Value: When you're incredibly rich, most of your money is tied up in stocks, businesses, or other assets that are difficult to move. Cash loses its value due to inflation, so billionaires turn to art as a preferred store of value. They buy art in bulk, lease it to museums, or store it securely. Blue chip art, in particular, has proven to be one of the most profitable investments, consistently outperforming the S&P 500. Platforms like Masterworks allow everyday people to invest in multi-million dollar paintings, providing an opportunity to tap into the art market.

Secret #6: The Power of Negotiation: Once you enter the realm of billionaires, your negotiating power skyrockets. They understand that the real profit lies in buying assets at a low price. By leveraging their wealth and influence, billionaires can secure favorable deals and discounts. They know that the point of purchase is where the profit is made, not at the point of sale. This skillful negotiation contributes to their immense wealth.

Secret #7: Strategic Business Growth: A business grows when one of three situations occurs. First, charging more while maintaining the same number of transactions allows for increased revenue. Luxury brands often follow this model. Second, charging the same but increasing the number of customers expands market reach. Fast food chains frequently employ this strategy when opening new locations. Lastly, charging more while increasing the number of transactions combines both approaches and leads to substantial growth.

Secret #8: Art as an Investment: Art holds a special allure for billionaires as an investment opportunity. Blue chip art has demonstrated remarkable performance, particularly during high inflation periods. Ultra-high net worth investors allocate a significant portion of their portfolios (30% or more) to art and collectibles. While investing in multi-million dollar paintings may seem out of reach for average individuals, platforms like Masterworks offer fractional ownership, enabling broader access to this lucrative asset class.

Secret #9: Art Sales and Profits: Art investments can yield impressive returns. Masterworks, for instance, has recorded net returns of 10%, 14%, and even 35% in recent art sales. By investing in shares of valuable paintings, individuals can participate in the profits generated when the artwork is sold. This democratization of art investing empowers everyday people to benefit from the potential financial gains of the art market.

Secret #10: The Simplified Journey to Billionaire Status: The journey to becoming a billionaire often follows a simplified model. Start by seeking initial funding from friends, family, banks, or angel investors. As the business gains revenue, scale it up and attract external investors. With each investment round, the valuation of the company increases, unlocking additional capital. Eventually, the company can go public through an IPO, turning its founders and investors into billionaires.

Secret #11: Learning from Success Stories: Successful companies like UiPath, which recently IPOed at a $35 billion valuation, provide valuable lessons for aspiring billionaires. By studying their strategies, business models, and funding rounds, we gain insights into the path to extraordinary wealth. Learning from the experiences of entrepreneurs who have achieved billionaire status helps us refine our own approaches and increase our chances of success.

Remember, these secrets are not a guaranteed roadmap to becoming a billionaire, but they provide valuable insights into the mindset and strategies employed by those who have reached extraordinary levels of wealth.

In conclusion, aspiring billionaires should consider leveraging ownership percentage, exploring real estate and private equity, using other people's money, practicing the art of buying low and selling high, embracing art as a preferred store of value, mastering negotiation skills, pursuing strategic business growth, venturing into art investments, following the simplified journey to billionaire status, and learning from success stories. By incorporating these principles into their own journeys, individuals can set themselves on the path to financial greatness.