Elon Musk: How Tesla CEO and billionaire manages his net worth after | Personal Finance | Finance

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Mr Musk is now worth an outstanding $281.6billion (£210billion) but life wasn’t always made of gold for the entrepreneur extraordinaire. Here’s how he made his fortune and why he now claims to be ‘cash poor’.

This was the first time Mr Musk got to handle such a big amount of personal wealth, and while he earned a substantial $22million (around £16million) from the sale he was still a majority shareholder in the business that would become PayPal.

This is the key element that helped Mr Musk build up such an immense net worth in a relatively short period of time.

By holding onto shares instead of taking out the cash to reap all the benefits of his hard work, Mr Musk was able to multiply his wealth eight times over when eBay bought PayPal. 

When he came into this windfall, Mr Musk set up SpaceX, Tesla and SolarCity in quick succession over a few years. 

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The success of these companies, and his continuous investment in them, would make him the wealthiest man in the world.

In 2010, Tesla stocks skyrocketed in 2010, taking Mr Musk’s wealth with it.

Mr Musk appeared on the Forbes rich list for the first time in 2012 with a meagre net worth of $2billion (around £1.4billion) in comparison to his current wealth.

But what do the world’s richest actually do with their wealth? The rather surprising answer for most is nothing, frugal lifestyles and investments often mean that the wealthy end up being cash poor. 

This is often referred to as the reason why the rich stay rich; their impeccable money management skills stop them from burning through their money faster than they can make it.

By continually investing and saving as much as they possibly can, their high net worths often don’t translate to actually having that amount on call. 

Mr Musk has claimed that he is ‘cash poor’ as he relies on credit for most of his day-to-day spending, with most of his money tied up. 

“Some people think I have a lot of cash, I actually don’t,” Mr Musk told investor Cathie Wood on a podcast last year.

While being cash poor may seem concerning to some, the majority of the top one percent are purposefully cash poor.

As an entrepreneur, Mr Musk spent most of his career putting everything into his companies, including foregoing his paycheque.

This has reportedly not changed, as in 2020 Tesla cut Mr Musks’ salary to zero as he kept refusing his minimum CEO salary.

Instead, Mr Musk is provided with stock options when Tesla’s worth takes a dive, so that when it recovers so does his wealth. 

The multibillionaire also owns a substantial amount of real estate, with a total cost of more than $100million (around £74million), which earns him a passive income.

With what little liquid wealth he does have, Mr Musk has an affinity for cars, owning a few Tesla, Jaguar, McLaren, Audi, BMW and Porsche vehicles and even having purchased the Lotus Esprit submarine car used in a James Bond movie for $920,000 (around £687,010).

The dad of six also tries to provide the best he possibly can for his children, saying: “I have the kids for slightly more than half the week and spend a fair bit of time with them. I also take them with me when I go out of town.”





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