Yankee Belle

This is the most important quote of the article: Some lawmakers have profited from investments in companies that have received federal bailouts; dozens of lawmakers are invested in Wells Fargo, Citigroup, Goldman Sachs and Bank of America.
I, too, would like to know how much of their wealth was acquired after they became public servants.

Mr Payne

What is important is the distribution of wealth along the parties. I wasn't surprised in the slightest that the wealthiest part of Congress is incredibly Democrat.

member

Wealthy people usually get extremely good rates on loans, usually sub 1% interest while the rest of us get 5%+. So lets say Mr. Rogers a billionaire wants to send his boy john to a Top U, which will be $200K total for 4 years. He could simply pay for the school all at once or year by year, but doing so would negate some of his liquid assets which likely implies investment opportunity was lost. He has the choice of taking a $200K loan at a incredibly good rate while keeping his investments going with his $200K, or using his own money forgoing the ability to invest that $200K.

In the end, if Mr Rogers would have gained around $48K on interest on his 2000K with compounding over 4 years with basic retirement vehicles at average rates. Though if he took the loan, he would pay about $8120.802 in interest on that loan. So in the end, he would make around 40K on his $200K after he took the loan and paid off the loan.

$48k - $8K = $40K

We then also need to consider the safety of ones money. Smart people always prefer to use other peoples money rather than their own. You need to delegate risk accordingly. Paying a small percent to borrow money is likely always better and always cheaper than using your own. As an example lets say Mr. Rogers does take the loan and something happens to his business or family. He now has his $200K there to utilize, instead of it being given away. That money can be used in emergencies, of any sort use your imagination.

You ask how I know rich people, I know them because I invest with them and have read many books on money and finance. There have been research papers written on the trends of the rich.

DocT

Mr. Rogers, the billionaire doesn't care about 200k which is equivalent to $200 to merely a millionaire.

Pizzagirl

$200K is pocket change to this hypothetical billionaire, member. Getting his hands on $200K if there was some kind of emergency (what, a new roof? car broke down?) isn't going to require any machinations.

BigG

A billionaire that earned his/her own money is very likely to care a lot about $200,000 or even $.02 dollars. I bet Warren Buffet or Bill Gates can lay hands on records accounting for every nickel they ever earned.

Pizzagirl

Fine, but member still doesn't have a clue -- since he doesn't inhabit those social world and never will -- that at the elite $50K/year colleges, there are plenty of people who are full-pay and do so without loans, just take the money out of whatever savings accounts they've set up for it. His assertion that "most rich people take out the loans" was made up of whole cloth.

BigG

Pizzagirl,

I think you are correct.

My point was people who have earned a lot of money did so, at least in part, because they care about money a great deal, even relatively small sums.

It might not be worth Bill Gates time and attention to take out a $200,000 loan. I don't know him personaly so I can't ask. I met him once, briefy, years ago. Its like meeting Jimmy Carter or Tommy Lee Jones, I remember them because they become prominent, but they won't recall me at all.

Everybody has a few stories about when they met so-and-so. "Little did I realize they would one day become God-Emperor of the Universe."

DocT

"A billionaire that earned his/her own money is very likely to care a lot about $200,000 or even $.02 dollars. "

Not when there's bigger money to be had. This is just penny wise - dollar foolish.

Son of Opie

In the books I read, the God-Emperor of the Universe was really a giant worm...

member

If you read the Book The Millionaire Next door, you see that most rich people are incredibly frugal and care about each cent. It is brought up in numerous parts in the book and others that what separates the rich from the non rich are how the rich treat money.

An extra 40K to a billionaire may not seem like a lot to the non rich, but to the rich they consider it extremely important. Rich people tend to make there money over time, which means many smaller amounts summed up.

Most rich people take loans, its that simple. if you don't believe me read the book.

DocT

"Most rich people take loans, its that simple. if you don't believe me read the book."

BS!

DocT

"Fine, but member still doesn't have a clue -- since he doesn't inhabit those social world and never will -- that at the elite $50K/year colleges, there are plenty of people who are full-pay and do so without loans, just take the money out of whatever savings accounts they've set up for it."

There are plenty of people who are full pay, do so without loans, do not take it out of savings but out of current income.

member

you can call BS, all you want. Just read the book or ask a truly wealthy person yourself. I know a few of them, and every one of them took loans to pay for their child's schooling.

I am offering you a source and a reference to the data, you just seem to be calling BS and not putting forth any facts.

susan4

member

DocT is probably a wealthy person. What he said "There are plenty of people who are full pay, do so without loans, do not take it out of savings but out of current income. " is real.