The tricky business of getting rich

Getting rich is harder than it used to be. But at least we all benefit when the minted torch their cash.

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If you have been saving and investing with a view to making it into the ranks of the super-rich, then we are afraid that this week we are the bearers of bad news. The goalposts have shifted. In New York and London, "1%ers can be heard moaning that having to live on $500,000 a year feels positively Dickensian", as Suzanne Woolley puts it on Bloomberg. These days, to make it into the ranks of "economy class rich" you'll need $25m in investable wealth. Business class? $100m. First class? $200m. Private-jet rich? Try $1bn.

These are the rough rules of thumb applied in the world of private banking, says Woolley. A married couple with an estate valued below about $22m, for example, held largely in a diversified portfolio of publicly-traded stock, may not need much help from private bankers since that $22m can go to heirs without the need to set up trusts and estates.

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A much wealthier family, with homes and assets in multiple countries and currencies, might require more complicated cash-flow management, customised financing for mortgages, yachts or planes, and the ability to borrow against art or investment portfolios. It may make sense to put business interests in a trust, with the adviser as trustee. "Getting rich is complicated," as Steven Fradkin of wealth manager Northern Trust says. "It's just a good complication to have."

Getting behind that "velvet rope of bespoke investment banking, tantalisingly out of the reach of the rest of us", is "key to how the super-rich keep getting super-richer", as Simone Foxman puts it, also on Bloomberg. Anyone can buy stocks. Only a privileged few can bankroll multi-million-dollar ventures or buy entire companies. Private equity "has become a playground of the new aristocracy". A fortune of $1bn is your ticket into some serious deal-making.

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Blow it on a madcap adventure

The younger generation of the minted, though, are less keen on preserving their wealth and dodging taxes than in making a difference through "impact investing". Tesla founder Elon Musk, for example, is burning through billions in his desire to create a better world.

Critics have been quick to lament the waste generated by Musk's empire, says Jamie Powell on the FT's Alphaville blog. They complain about the billions in government subsidies blown, or castigate the vanity of financiers funding Tesla's persistent losses. But this is the way of capitalism. The railway mania torched through capital economist Bill Janeway calculates that railroad investment amounted to about 20% of all capital formation in the US, or 3% of GDP, during the mid-1850s. Many investors got burned in the panic of 1857.

Yet the railways ended up transforming America and are still giving today. When the dust has settled in 20 years, will we look back at Tesla's supercharging networks and think of it as anything other than key infrastructure? Perhaps it's time to celebrate billionaires who blow it all. After all, as economist Brad DeLong has pointed out, if a business blows up, investors lose but "we get to use their stuff for free".

Tabloid money the money says let women play the lead

"In Hollywood, money talks and the box office dictates trends," says Lorraine Kelly in The Sun. So, it's good news that the all-female cast of Ocean's 8, which includes Barbadian singer Rihanna, has "trounced" the other male-dominated films, "because it clearly shows that moviegoers WILL happily pay to see films starring women in leading roles". Ocean's 8 is a "rather silly, but hugely enjoyable" spin on the heist movie with a satisfying end twist and decent parts for women who are all too often usually "the wife" or "the best friend". And it proves that the "appallingly bad" all-girl version of Ghostbusters, "a real stinker that bombed horribly", was a blip. "Hopefully, this will be the start of more big-budget films with kick-ass roles for women that aren't twee or patronising."

The cost of calls to 118 118 directory enquiries is to be slashed by 70%. Why has it taken so long? asks Martin Townsend in the Sunday Express. While most of us resort to Google, many elderly people have no access to computers. "The idea that they might have been paying £11 for a 90-second call to 118 118 fills me with fury." Under the new Ofcom-endorsed proposals, that will fall to £3.10 still too much, but any move to right a wrong is to be welcomed. In fact, there should be a "minister for common sense" to oversee it, before moving on to tackle veterinary fees and"It would be great if the war on directory enquiries was just the first shot fired in a great battle to bring Britain back to its civilised senses."

Not all changes to billing are to be welcomed, however, says Richard Littlejohn in the Daily Mail. I opened the post yesterday to find a leaflet telling me I didn't need a paper TV licence any more. It's all online now, you see. So, why bother sending out a letter? Wait, it gets better.On the reverse side, there were instructions on how to turn the letter into an origami swan. Can you imagine the meeting where they came up with that daft idea? I suppose if you scrap paper licences, you don't need so many staff to process them. Still, you've got to give them something to do in the meantime. I know! Let's send out leaflets telling people how to turn their TV licences into a swan. "Coming soon how to turn your gas bill into a sun hat."

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