So far in 2019, the world’s second-wealthiest billionaire – Bill Gates – has earned as much as $17 billion. This is probably much more than the amount millions of Nigerians will ever be able to make in their lifetime. The Co-founder and former Microsoft Chief Executive Officer is currently worth $106 billion, despite donating a sizable amount of his net worth to charitable course.
What has helped him make so much money this year?
Well, the answer to this is simple – the billionaire relies on a particular investment strategy which has worked for him over the years. In a recent interview with Bloomberg, Bill Gates said: “the strategy that’s been used on the investments is to be over 60% in equities.” In other words, the world’s richest person trusts equities more as an investment option; more than all the other alternatives.
— Bloomberg (@business) September 17, 2019
Why you should be like Gates
Simply defined, equities are stocks or any other security representing an ownership interest in a company. Equities also indicate a company’s ownership structure, meaning that a shareholder’s equities represent his/her ownership stakes. Interestingly, having a stake (equities) in a company entitles a shareholder to a lot of benefits as you can see below.
The benefits of equities
Capital Appreciation: One of the benefits of equity investment is the possibility of capital appreciation. What this simply means is that if you stake your equities in a profitable venture, the likelihood of your initial investment capital growing overtime abounds. This is because the share price could increase in double digits.
Dividend payment: As an equity investor, you are entitled to periodic dividends from the company you have invested in. This is one of the surest ways to get return on investment. It is also one good way to have one’s money work for them while they sleep. A large chunk of the $17 billion Bill Gates has made between January and September all came from dividends paid on his equity investments.
Ownership gives control: As an equity investor, you are a co-owner of a business venture. What this means, therefore, is that you get to participate in the decision-making process of the company. In business parlance, this is called “voting right”. And the more the number of shares you own, the more your right to vote.
Claim over Assets and Income: As an equity investor in a company, you co-own the company along with its assets and finances. What this means, therefore, is that not only are you entitled to receive financial benefits, you can lay claim any of the company’s asset anytime. Bill Gates will always claim to be a major owner of Microsoft for as long as he keeps his equity investments in the company intact.
An equity investor can also receive bonus shares. More so, shares owned by an investor in a company are liquid, meaning that ownership of such shares can easily be transferred to a third party. So, imagine that Bill Gates (who is 63 now) dies at the age of 110 years old, his shares in Microsoft can easily be transferred to his relatives.
It is, however, important to mention that much like all the other forms of investment, equities can also be risky. That notwithstanding, the many advantages associated with this form of investment should encourage you to rely on it as a major investment strategy. It is, indeed, reliable. That’s why Bill Gates has 60% of all his $106 billion fortune in equities.