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Billionaire Watch

Reinvestment: The powerful strategy used by the 2 richest men in the world

Bezos and Musk increased the stock value of their companies by investing back into the company, the proceeds they made from it.  

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Reinvestment: The simple but powerful strategy used by the two richest men in the world. 

Jeff Bezos and Elon Musk are collectively worth $372bn. They are the two wealthiest individuals on earth. Their wealth has grown significantly over the years and it looks likely to remain so.

To give you a clear picture of the significant increase in the wealth of both men, read the points below.

  • According to Business Insider and Bloomberg, Jeff Bezos’ net worth increased by 59.1% in 2020. The tech billionaire added a humongous $67.9bn to his fortunes in 2020 and is currently worth $197bn.
  • According to CNBC Elon Musk started 2020 with a net worth of $28bn, he is currently worth $175bn.

Both men have employed some interesting strategies in growing their wealth to the point that it currently is, and this article will harp on one of these strategies.

Reinvestment

Reinvestment as an investment strategy is defined by Investopedia as the practice of using dividends, interest, or any other form of income distribution earned in investment to purchase additional shares or units, rather than receiving the distributions in cash.

In very simple terms, it means ploughing the income you make from an investment back into it, rather than receiving the income as cash. Jeff Bezos and Elon Musk both employed this strategy to grow their wealth in one year.

How the multi-billionaires did it 

The Reinvestment strategy has been proven over time to increase the value of a stock or mutual fund. Buying a huge stake in your own company shares encourages more investors to also buy your company shares. Jeff Bezos and Elon Musk increased the stock value of their companies by reinvesting some of their profits and in so doing, they significantly got richer.

Jeff Bezos’ reinvestment strategy

Jeff Bezos retains part of his wealth in his company’s stocks. This means that instead of collecting all of his profits in cash, he retains some in his company by buying its shares. He currently owns about 11% of Amazon’s shares according to a November 2020 SEC filing.

The result 

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  • Jeff Bezos added an extra $67.9bn to his net worth in 1 year.
  • Amazon’s stock price rose by a staggering 70% in a calendar year.
  • Jeff Bezos is currently the richest man in the world.

Elon Musk’s reinvestment strategy

Like Bezos, Elon Musk also retains part of his wealth in his company’s stocks. He owns over 20% of Tesla stocks. His reinvestment strategy played a major role in driving Tesla shares to a whopping 740% increase in 2020.

The result

  • Elon Musk’s Tesla Stock price increased by 740% in just 1 year.
  • His net worth increased by over 500% from 2020 to 2021.
  • His company got into the S&P 500 index and he became the second richest man in the world.

What you should know

Jeff Bezos is the world’s richest person for the fourth year running, according to Forbes while Elon Musk moved from his 31st position to his current 2nd place on the Forbes billionaire ranking for 2021.

I Am A Business Analyst And Digital Media Enthusiast Covering Wealth And Business Leaders. Follow Me On Twitter

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    Billionaire Watch

    Top 5 women who became billionaires after divorcing their husbands

    The divorce of Bill and Melinda Gates is set to mint another woman billionaire.

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    Bill & Melinda Gates Foundation

    The divorce of Bill and Melinda Gates is set to mint another woman billionaire. Yesterday, Nairametrics reported on the first set of transactions made by Bill Gates to his ex-wife, Melinda.

    She was transferred securities worth over $1 billion, already making her a billionaire. With more transfers set to come, we want to look at 5 other women who became billionaires after divorcing their husbands.

    5 .  Sue Ann Arnall ($1 billion  

    Sue Ann Arnall was the wife of oil baron and CEO of Continental Resources, Mr Harold Hamm. The 26-year-old marriage ended in 2015 with a handwritten check of a whopping $974 million to Sue Ann, which she initially rejected on the basis that it was too small. After a series of back and forth in court, however, she finally accepted the cheque.

    Before the cheque, Harold Hamm had initially paid her over $20 million, driving the total settlement figure over a billion dollars.

    Harold Hamm is currently the 247th richest man in the world with a net worth of $8.6 billion.

    READ: There are only 15 black billionaires in the world, here are the top 10

    4.  Sue Gross ( $1.3 billion )

    The ex-wife of Bill Gross, the billionaire founder of the investment management firm, PIMCO, walked away from her 32-year-old marriage to the business mogul with a handsome $1.3 billion dollars. She started her own charity afterwards.

    Bill Gross is currently worth $1.5 billion according to Forbes. He founded PIMCO in 1971 and it became one of the most successful investment management firms in America.

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    READ: Squarespace founder is the latest billionaire, set to make $3bn from listing his company

    3.  Elaine Wynn ( $2 billion ) 

    Elaine Wynn is the ex-wife of Steve Wynn and she is a Co-Founder of the successful casino company, Wynn Resorts. After the couple divorced in 2012, she was transferred 11 million shares from the company which was valued at $795 million at the time.

    Her ex-husband sold a substantial amount of shares later that year, which she also got a stake in. Today, her total shares from the Wyatt Resorts are worth over $2.3 billion according to Forbes.

    READ: Is Donald Trump still a billionaire?

    2.  Melinda Gates ($1.8 billion and counting) 

    Melinda Gates is the latest billionaire divorcee on the block and she is already worth $1.8 billion after the first transfer of wealth. Her ex-husband, Bill Gates is the 4th richest man in the world. She will be worth over $60 billion if Bill Gates’ fortune is split evenly with her, although that is very unlikely.

    1.  Mackenzie Scott ($57.7 billion) 

    The ex-wife of the richest man in the world tops the list with a staggering $57.7 billion net worth. She met her ex-husband, Jeff Bezos when they both worked at a hedge fund in New York and she helped set up Amazon.

    After her divorce from Bezos in 2019, she received 4% of Amazon shares which was valued at $35 billion then. Amazon stocks have witnessed a near 75% increase since then. She is currently worth $57.7 billion according to Forbes.

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    What you should know 

    Melinda Gates may top the list after the complete transfer of wealth by her ex-husband, Bill Gates.

    Continue Reading

    Billionaire Watch

    The Gates Divorce: Bill Gates’ Holding Company transfers $1.8bn of equities to Melinda Gates

    More details have now emerged on the Gates asset split following the divorce.

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    Details of how Bill and Melinda Gates will share the Gates’ fortune are beginning to emerge. The multi-billionaire couple announced their divorce after 27 years of marriage on Monday via a joint statement.

    Since the divorce announcements, questions on how Bill’s $146bn fortune would be split, have arisen in the media. Nairametrics also did an earlier article on a few possible financial outcomes, particularly regarding the BMG Foundation that the couple jointly Chair.

    More details have now emerged on the Gates asset split following the divorce.

    READ: Bill Gates holds far more cash than Nigeria’s foreign reserve

    Cascade transfers $1.8bn equities to Melinda Gates

    Cascade Investment, a holding company Bill Gates founded with proceeds from his Microsoft Corporation yesterday transferred securities worth more than $1.8 billion to Melinda Gates following their divorce.

    The securities involved include:

    14.1 million shares of Canadian National Railway Co. worth about $1.5 billion

    2.94 million shares in AutoNation Inc., worth $309 million.

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    What you should know

    Melinda Gates is on her way to join the league of women who became sudden billionaires after divorcing their husbands.

    Continue Reading

      





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