Here is a graph I put together using data from Forbes for 2008 and 2009 to see how much money the top 25 richest people in the world lost during the last year. All together the 25 richest people in the world lost 202.5 billion dollars in 1 year. Click on the graph for a larger image

The billionaires who lost most money during the last year

1. Lakshmi Mittal – 25.7 billion dollars
2. Warren Buffett – 25.0 billion dollars
3. Mukesh Ambani – 23.5 billion dollars
4. Bill Gates – 18 billion dollars

The only billionaire who made money during last year

The only billionaire in this list who made money during the last year was Michael Bloomberg.

He is the current mayor of New York and the owner of Bloomberg financial software services company. The reason he made 4.5 billion dollars last year was because the stock market has been crazy during the last months and his company Bloomberg L.P is the largest financial news delivering company in the world. Bloomberg sells financial data and news to banks, stock brokers, analysts and news agencies.

When the economy is doing badly he has a lot more news to sell!

Warren Buffett has made a million dollar bet that the S&P 500 index fund will return more to investors over the next 10 years than a collection of hedge funds that are carefully selected by experts.

The bet was made between Buffett and a company called Protégé Partners LLC – a company that specializes in running funds of funds. Those in the dark – a fund of funds is just like a hedge fund but instead of owning stocks or bonds, it owns other funds.

This has some positive and negative aspects.

The Good

A fund of funds is extremely diversified. Since it consists of funds that each consist of hundreds of stocks it is relatively risk free. This is good during the bad times.

The Bad

When compared to owning stocks or index funds a fund of funds has extremely high fees. Such a fund has an annual management fee of 1% and each one of the funds that it consists of have fees of about 1,5%  a year. In contrast -  owning the Vanguards S&P 500 index fund has a yearly fee of only 0,07%.

Hedge funds also typically collect 20% of the gains they make – this leaves you 80% of which the fund of funds also takes its share – typically about 5%.

Why Buffett Decided to Take This Bet

The high management fees of funds of funds are what Buffett thinks will win him the bet.

In order for a fund or a fund of funds to equal the return of the S&P 500 index, it has to have a lot higher yield than the index. Buffett is essentially saying that even if the fund he is betting against can surpass the yield of S&P 500, the costs associated with the fund will be so high that net of all fees the yield of S&P 500 will be greater than the fund of funds Protégé Partners is running.

You can read Warren Buffett’s and the Protégé Partners views on the bet at Long Bets.

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This is INSIGHT 5 from a set of rules about how to get rich

In order to get rich you need to wake up early, work you ass off during the day and go to sleep still thinking about work.

Yes – there are people who win the lottery and there are people who get large inheritances from their unknown relatives. There are people who get to be rich and famous by doing little or nothing and there are people who just get lucky.

You are not one of them

These things always happen without you knowing them in advance. Therefore you have to live your life as if they would never happen to you.

Indeed, you might win the lottery, but it is far more likely that you won’t – How many people who won the jackpot do you know? Statistically speaking it is more likely that you get hit by lightning than that you win the lottery…

Most people are too lazy to get rich

Everyone dreams of being rich and famous, but when its time for action – people are simply too lazy to get rich. They buy a lottery ticket because they want to get rich without working too much. They are not ready to work, study and sacrifice their personal life to get rich – they simply want the money. People like that go to work for the paycheck. They really don’t care about being the best at what they do or working until morning simply because it’s interesting (That’s what I am doing right now ). There is nothing wrong with different people liking different things – some people value working, others value their free time.

If you want to get rich and successful you have to work for it

If you look at anyone who is rich enough to give us a good example about how to get rich – people like Bill Gates, Warren Buffett, George Soros, Richard Branson or Donald Trump – you will see that they all have 1 thing in common.

They do a lot of work!

Whatever they do, they do it more than anyone else. They can make their money from computer software, investing or building skyscrapers but they all have the ability to do more in one day than most people do during the whole month.

Everyone can make money

One of the best things about money is that it can be made everywhere. And anyone can make it. You just have to work for it more than the next guy does.

Don’t be too lazy to achieve your goals!

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Here is an interesting 4 minute interview with Warren Buffett – currently the worlds richest person with a whopping Net Worth of 62 billion dollars. He made $10 billion within the last year pushing Bill Gates from his throne of being the words richest man for 13 years straight.

In the video below Warren Buffett makes a little survey amongst his staff and finds out that among 15 people working for him, he is the one paying the lowest percentage taxes. And it’s pretty obvious that he makes a lot more money than his workers combined. Buffett argues that rich people and himself among them have so much money that they should pay more taxes. It seems to me that Warren Buffett is amongst the most honest rich people out there. I wouldn’t mind giving him my last 5 dollars! If I had that much that is

Warren Buffett also offered 1 million dollars to any of the Forbes 400 richest people who can show that on average they pay more taxes than their secretaries pay. So far no one has come forward to claim the million.

To tell you the truth I wasn’t sure whether to post this video under “How to get rich”. It seems that paying more taxes is a rather good way to say good bye to your money

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