stored value vs bank accounts

[jamesbogosian]

assuming that rich people like bill gates, jeff bezos, mark zuckerberg, ect... decided to put some of their money like 2-3 billion usd by storing such money in shopping malls, luxury hotels, ect.... instead of offshore bank accounts, but then how could they actually use that money vs accessing it via offshore bank debit card when they wanted to make a purchase like a brand new car, a small residential home, levis online order purchase, purchase lacoste polo shirts at their boutique, ect...? lets say 1.8 billion usd approximately, why would they be better off storing such money in luxury houses, luxury cars, actual gold, precious artwork, gems, ect... rather than have the money deposited in some offshore bank where such money could be accessed like your average joe with a bank debit card? even if such money is stored in such luxury items or places, how can they use it if its already stored in there then? this part i dont fully understand. how could the money be used like cash if already stored in such places and items?

 

[AlbanyJames]

Highly doubt they need an offshore bank account with debit card, lol. They will just buy the entire Levis/Lacoste company!

You realize people at those levels have family offices which only work for them?

They have more people working than your average offshore banana Republic bank.

 

[Martin Everson]

rather than have the money deposited in some offshore bank where such money could be accessed like your average joe with a bank debit card?

Have you seen deposit protection on offshore bank accounts? I am pretty sure most don't cover you for more than 100k at best. If you have $1.8bn in cash in such an account that means a loss of $1,799,900,000 if bank goes tits up. Gold, cars, art and property then will look a lot more attractive alternatives as stores of value .

I have mentioned it before in other threads the wealthy keep their cash in short term US treasuries. This includes Warren Buffets Berkshire Hathaway multi billion cash pile which is all held in short term US treasuries. One has to ring fence their cash from bank liability. Hence I keep mine in Euro German/Netherlands AAA government bonds and not in any balance on a bank account which can be bailed-in or worse the bank becomes insolvent and poof your money is gone minus the 100k deposit protection which will go a long way.....not. This goes for 99.99% of all cash rich people who will use cash funds to gain access to the same US treasuries and AAA government bonds. It is these same people who are helping to drive bond yields negative alongside the central banks.

even if such money is stored in such luxury items or places, how can they use it if its already stored in there then?

They can use those assets as collateral in some cases such as real estate and gold via structured lending. With gold and property you can get a decent Loan to value (LTV) from a lender plus tax benefits because its debt. God willing one day you will have $1bn in a bank account and the first thing you would be worried about is what if the bank goes poof....how much of my $1bn is safe? Then when you realize even in US the FDIC insurance will only cover $250k of your $1bn you too will start looking at non-bank assets and it will all make sense.

 

[jafo]

Have you seen deposit protection on offshore bank accounts? I am pretty sure most don't cover you for more than 100k at best. If you have $1.8bn in cash in such an account that means a loss of $1,799,900,000 if bank goes tits up. Gold, cars, art and property then will look a lot more attractive alternatives as stores of value .

I have mentioned it before in other threads the wealthy keep their cash in short term US treasuries. This includes Warren Buffets Berkshire Hathaway multi billion cash pile which is all held in short term US treasuries. One has to ring fence their cash from bank liability. Hence I keep mine in Euro German/Netherlands AAA government bonds and not in any balance on a bank account which can be bailed-in or worse the bank becomes insolvent and poof your money is gone minus the 100k deposit protection which will go a long way.....not. This goes for 99.99% of all cash rich people who will use cash funds to gain access to the same US treasuries and AAA government bonds. It is these same people who are helping to drive bond yields negative alongside the central banks.



They can use those assets as collateral in some cases such as real estate and gold via structured lending. With gold and property you can get a decent Loan to value (LTV) from a lender plus tax benefits because its debt. God willing one day you will have $1bn in a bank account and the first thing you would be worried about is what if the bank goes poof....how much of my $1bn is safe? Then when you realize even in US the FDIC insurance will only cover $250k of your $1bn you too will start looking at non-bank assets and it will all make sense.

@Martin Everson

I love this piece!

Would you be so kind as to share a few books on this topic or journals or even articles? I really need to get a hang of this.

Thank you in advance.

 

[Martin Everson]

I wish I did have some books or journals on the topic. Perhaps I may write one soon.