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Most Billionaires Are Self-Made

The world currently contains 2,170 billionaires — and you’re (probably) not one them, at least not yet. They have a combined net worth of $6.5 trillion, an amount larger than the entire GDP of every country in the world except China and the United States. The number of billionaires increased by ten between June 2012 and June 2013, says a study conducted by UBS and Wealth-X, a consultancy service. Their total wealth grew over that period by 5.3 percent.

That growth, though, was uneven. The European billionaire population fell from 795 in 2012 to 766 in 2013 (even as their total wealth rose 3.7 percent from $2,045 billion to $2,120 billion.) Asia, however, picked up eighteen new billionaires to reach a grand total of 508 while North America’s most exclusive club welcomed eleven new members this year, bringing its membership to 552. (Although with 214 few individuals, North America’s billionaires are worth $38 million more than all of Europe’s super-rich combined.)

Although billionaires have a mean worth of $3 billion each, most just scrape into the club. Some 1,175 people are worth between $1 billion and $2 billion. Only four, Bill Gates, Carlos Slim, Warren Buffet and Amancio Ortega, founder of clothing chain Zara, qualify as “mega-billionaires” with total wealth topping $50 billion each.

New York Has The Most Billionaires

Each of those mega-billionaires is self-made, an exceptional figure. Overall, 60 percent of the world’s billionaires made their fortunes themselves. Twenty percent inherited their wealth and another twenty percent inherited a fortune and used it to make another.

New York has the largest number of billionaires, with 96, but Hong Kong has 75, Moscow 74 and London 67. Twenty-five billionaires are prepared to pay France’s giant tax bills for the benefit of living in Paris while fourteen billionaires are happy to call Houston home.

Few, though, call just one place home. The average billionaire owns four properties around the world and each of those properties is typically worth nearly $20 million. Other than buying a series of giant houses, each billionaire also spends about $22 million on a yacht, $16 million on a plane and $14 million on art. Just 2.3 percent of the world’s richest people play golf. But they don’t need to; they’re already well-connected. According to the survey, each average billionaire’s richest three friends have a combined wealth of $15 billion.

So how can you get to join this exclusive club?

Being born to the right family will help, of course, and so will being the right gender. Just 17 percent of the world’s billionaires are women and fewer than one in five of those women made their own fortunes. (In Asia, 92 percent of billionaires are men and while 95 percent of them made their own money, only 5 percent of Asia’s female billionaires did.)

You could also go to the right school. Harvard has produced 52 billionaires, nearly double that of its next most successful college, University of Pennsylvania, which has made 28. Stanford has produced 27 of the world’s super-rich and MIT fifteen. Only one school in the top ten billionaire teachers is not in the United States. The UK’s Cambridge University has eleven billionaire graduates. The good news, though, is that once you’re in, you might be able to put the books down. Only 68 percent of billionaires have a bachelor’s degree. While that’s higher than the average in any country, it’s much lower than the 86 percent of people worth over $50 million who have degrees. The numbers aren’t helped by 52 percent of Middle Eastern billionaires who didn’t bother attending college at all.

And, of course, if you’re going to make your billion dollars yourself, it will help to study the right subjects and work in the right fields. It’s no surprise that the largest number of super-rich work in finance, banking and investment. Some 17 percent of billionaires made their money with other people’s money. Ten percent are in textiles, apparel and luxury goods, and 8 percent are involved in manufacturing.

How To Invest Like A Billionaire

So if you want to be a billionaire and you weren’t lucky enough to be born to one or marry one, then you should either be working in finance or putting together a chain of luxury goods stores.

On the other hand, if it’s too late, you can always invest like one. According to Simon Smiles, Chief Investment Officer for Ultra High Net Worth Individuals at UBS Wealth Management, five trends will affect investments over the long term. These include: improving agricultural efficiency; increasing rates of obesity; growing water scarcity; ageing populations; and the shift to robotics and automation.

He doesn’t lay out specifics but he does suggest companies, products and services in a range of different fields which should make for good investments over the long term:

“companies that help increase agricultural yields through agricultural equipment, agrichemicals, and genetic modification…. Drugs that can help manage the consequences of obesity, such as diabetes… companies promoting health and weight management, sporting goods, and healthy foods… crematoriums and funeral homes.”

The number of people dying, Simon Smiles points out, is expected to grow by 1 percent a year over the next decade — a real growth industry.

You don’t have to be a billionaire to invest in any of those industries, although clearly the rewards will be much higher if you are.

It also helps that the super-rich don’t actually need their money, so they can lock it away in illiquid assets such as private equity and hedge funds which pay a premium. If you’re rich, it’s much easier to make a lot of money.

On the other hand, if you buy a thousand dollars’ worth of stock in a public gym company or a funeral home, you can feel comfortable that your money is lying alongside that of one of the world’s richest people who owns a yacht, a plane and four homes. It’s probably the closest you’ll ever get to a billionaire.

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