Amazon founder Jeff Bezos is the No. 4 richest man in the world, according to Forbes, which estimates his net worth around $235.1 billion (a number that changes daily) — but most of that vast fortune isn’t sitting in a savings account as cash.
So, how much could Bezos actually spend today if he decided to make a mega-purchase that required him to leverage as much of his spendable assets as possible? Here’s a breakdown of Bezos’ purchasing power.
Find Out: If Bezos’ Wealth Was Evenly Distributed Across the US, How Much Would We Get?
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Liquid vs. Illiquid Assets
Billionaires and commoners alike are concerned with liquidity — the ability to convert assets to cash quickly without value loss. For a billionaire like Bezos, that might mean weighing the cost of purchasing a nine-figure mega-yacht versus the risk of having to sell it at a multimillion-dollar loss once the novelty wears off.
For an ordinary earner, liquidity might mean weighing the benefit of making an extra mortgage payment to reduce long-term finance charges versus the risk of tying money up in equity that might be needed for emergency car repairs.
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A Side-by-Side Comparison
Liquid assets:
- Are easy to convert to cash quickly with minimal value loss or fluctuation
- Are ideal for emergencies and short-term use
- Include stocks, mutual funds, bonds, ETFs, savings or money market accounts and, of course, cash
Non-liquid assets, on the other hand:
- Are challenging to convert to cash quickly without the risk of substantial value loss
- Are best as long-term investments
- Include real estate, businesses, collectibles and art
A Look at the Assets Behind Bezos’ Fortune
The ultra-wealthy — particularly high-profile billionaires like Bezos — are known for guarding their finances through mechanisms like trusts and private family offices, so an exact accounting is not possible.
However, credible reports that examine public records like SEC and business filings offer insight into how much of his $235.1 billion fortune Jeff Bezos could actually spend.
- Bezos has a sprawling portfolio of illiquid (unspendable) real estate holdings. Architectural Digest reports it at $500 million. According to the Robb Report, it’s more like $700 million.
- Bezos also owns the Washington Post and the aerospace company Blue Origin. Both are privately owned and, therefore, their exact value is unknown. However, as business interests, they are considered illiquid.
- Forbes reports that Bezos, who stepped down as CEO of Amazon but serves as its executive chairman, owns 9% of the company.
Bezos Is Highly Liquid…Sort Of
Amazon has a market cap of $2.36 trillion, which makes Bezos’s 9% share worth roughly $212.4 billion. That’s 90.34% of his $235.1 billion net worth held in publicly traded stock, which can quickly and easily be converted to cash.
That’s much more than the average high-net-worth individual (HNWI) keeps liquid.
According to the U.S. Trust Survey of Affluent Americans from Bank of America, HNWIs keep an average of just 15% of their portfolios in cash and cash equivalents.
However, there’s a caveat.
Stock Shares Are Liquid — but Bezos Is No Ordinary Shareholder
If an ordinary investor sells $100, $1,000 or $100,000 of a company’s stock, no one notices. However, when the ultra-rich dump massive amounts of stock, it’s enough to flood the market and upset the balance of supply and demand — and investor sentiment can fan the flames.
When wealthy, influential and connected investors engage in stock dumping, it can create a panic among retail investors who presume the bigwigs know something they don’t. This is especially true when the billionaire doing the dumping is selling off vast swaths of the company he founded. If Bezos tried to convert $212.4 billion worth of his own company’s shares, the market reaction would likely be mass panic-selling that tanked the price of the very stock that makes up nine-tenths of Bezos’ own wealth.
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This article originally appeared on GOBankingRates.com: How Much of Jeff Bezos’ Net Worth Could He Actually Spend Today? A Guide to Liquid Assets
