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Understanding How Much $1 Billion Is

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Like most people, when you were younger, the prospect of winning or earning a million dollars was like a dream. Today, because of inflation and the rising costs of living that are associated with it, a million dollars doesn’t go quite as far as it used to. The new metric of unconquerable wealth is the billion – but not many people can truly visualize just how far this incredible sum of money actually stretches.

Visualizing Huge Sums of Cash

As we mentioned, a million dollars is an at least approachable amount of cash for the average person in America. For example, if you work for a few decades, and earn an average of $45,000 per year for all 20+ years, then you would have made a million dollars in total For a more visual example, stacking a million dollars in the biggest denomination available ($100 bill) would be about the same height as a 5th grader – or 45 inches. If instead you arrange the $100 end-to-end, a million dollars’ worth would stretch nearly a mile long.

Now, given that a billion dollars is a thousand times a million, you can imagine the dimensions get much more impressive. If you stack $1 billion worth of $100 bills, it would rise much higher than is possible for any man-made skyscraper at about 80% of a mile. As for earning that much money, it would take close to 25,000 years, working for $45,000 per year, to earn $1 billion! If instead you stack the $100 end-to-end, 1 billion visualized would not even be able to fit on the planet earth.

Incredibly, several lotteries have come close to shelling out this amount of cash in winnings.

Have Any Lotteries Paid Out $1 Billion?

There are several well-known lotteries that pay out huge jackpots. The Powerball, Superlotto and certain national lotteries have made some people multi-millionaires. The Mega Millions jackpot has paid out over half-a-billion twice; Powerball has done so more than three times in recent history.

As of mid 2020, the Mega Millions lottery has not had a winner for long enough for the jackpot to have risen to an insane $1.6 billion – which will vault some lucky people into an exclusive class of wealth. As reported by several news outlets back in 2019, a Wisconsin man took home a whopping $768 million after winning the March 2019 Powerball Lottery. Before this, an even larger $1.59 billion had been won in January of 2016 for the biggest prize ever. Of course, since it was split among three winners, no one quite became a billionaire as a result – but they were close enough to have access to the same financial vehicles.

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How Does a Billionaire Spend Their Cash?

If you want to truly get a grasp of just how far up the ladder a billionaire is over a “mere” millionaire, we have to take a real-life example. Retired basketball superstar Michael Jordan is reported to have a net worth of about $2.2 billion. Although net worth does not mean liquid cash, Jordan certainly has access to $1 billion and could theoretically convert his net worth to liquid cash.

In the following, we’ll check out some of Jordan’s major expenditures, and see just how far his billions stretch to pay for these. The key takeaway is how much interest a billion dollars can earn, which is what would give you vastly greater purchasing power than a million dollars.

Michael Jordan’s Major Expenses Detailed

When shoe giant Nike first signed Michael Jordan back in the 1980s, they did so for “just” $250,000 per year. Today, Nike sells nearly $3 billion worth of shoes through the Jordan Brand, and Michael makes around $100 million from royalties. When you combine his other earnings from major sponsors such as Ball Park Franks, Wheaties, Hanes, Upper-Deck, Gatorade and others, his total yearly take is about $150 million.

The bulk of Michael Jordan’s net worth, and the thing that launched him to billionaire status, is his 97% equity ownership of the NBA team, The Charlotte Bobcats. Jordan bought the team for $175 million and, by the year 2014, the value had risen to $1.5 billion. Additionally, Mike has a stake in a professional baseball team, as well as ownership of several steakhouses and restaurants.

As for his expenditures, they add up to quite the hefty amount. Jordan has a $12.8 million home in Florida, a $2.8 million lakehouse in Charlotte, a $7.5 million home in Park City, Utah, and a $29 million home in Chicago that he’s been looking to offload for nearly a decade. He also has a golf course that he spent $15 million to build, as well as an assortment of expensive cars – 40 in total; which probably runs him less than $10 million.

Michael Jordan’s most expensive purchases are his $62 million private jet and an $80 million private yacht, which sets him back $840,000 per week in upkeep costs. In total, Jordan spends tens of millions of dollars per year; he also makes hundreds of millions of dollars from his endorsements. With $1 billion invested in a mutual fund that returns 7%, he would earn $70 million in interest! This is why his net worth continues to grow, year-after-year, despite his expenditures.

 

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