close
close

What Portfolio Is Right For You

Let’s start with learning about you. Answer a few important question, and we can start building your recommended investment strategy based on your financial objectives.

No Expensive Cars Thank You, We’re Really Rich
July 30, 2020

No Expensive Cars Thank You, We’re Really Rich

Written By: Andrew Hallam

One of my neighbors drives a new Corvette. His license plate reads, “UR2ND.” I haven’t met him yet. He might be a great guy. But his car and license plate combination flips the middle finger to his neighbors.

One of my affluent friends says, “Nothing good really comes from showing people what you own.” Perhaps that’s why so many billionaires drive understated cars. Doing otherwise might be socially alienating. A guy like Mark Zuckerberg, for example, could show up to work in a Lamborghini or Ferrari. But he knows most of his employees at Facebook couldn’t afford those wheels.

Zuckerberg is one of the world’s richest people. In 2020, Forbes pegged his net worth at $86.8 billion. But according to CNBC, his favorite car is his Acura TSX. He also owns a Volkswagen GTI, and according to Business Insider he has been seen driving a Honda Fit as well. None of these cars are worth more than $30,000.

Alice Walton is just as pragmatic. The world’s richest woman is worth about $52.8 billion. Yet, she’s famously down-to-earth. She could drive any car she wants, but much like her late father, her choice of vehicles wouldn’t turn heads at a local farmer’s market. She drives a 2006 Ford F-150 King Ranch truck.

In 2020, Alice’s brother, Jim Walton, was the 8th richest person in the world. Forbes figured his net worth was $54.6 billion. But if an expensive car would make Jim Walton happier, he doesn’t appear to know it. He drives a Dodge Dakota truck. 

Jack Ma is similarly understated. The former chairman and co-founder of Alibaba Group is the richest man in China. His net worth is estimated to be $44.1 billion. But he reportedly drives a Roewe RX5 SUV, which has a base price of just $15,000.

You might wonder why these billionaires drive such modest cars. Perhaps they don’t want to stand out. Perhaps they don’t need a supercar to feel good about themselves. It’s worth asking, however, “Aren’t they sacrificing enjoyment by not driving flashy cars?”

Professors Norbert Schwarz, from Michigan State University and professor Jing Xu, from Peking University, would probably say, “No.” In a research study, they asked people to rate how they felt while driving. Some of them drove high-end cars. Others didn’t. But there was no correlation between the happiness they felt while driving and the cars they drove. In other words, high-end cars didn’t make people happier while they were behind the wheel.

Norbert Schwartz explains: “During the test drive of a new car, our attention is focused on the car, and the more luxurious it is, the better we feel while driving it. This experience is real, visceral and compelling. What we miss, however, is one simple thing. Once we have owned the car for a few weeks, it no longer captures all of our attention and other things will be on our minds while driving. As soon as that happens, we would feel just as well driving a cheaper alternative.”

You might think Mark Zuckerberg, Jack Ma, Alice Walton and Jim Walton are more than a little quirky. But most of the world’s ten richest people drive cars that might be worth less than yours. 

In 2020, Larry Page was the world’s 7th richest person, with a net worth of $64.6 billion. If driving a high-end car would increase his happiness, somebody forgot to tell him. He drives a Toyota Prius. 

His buddy, Sergey Brin, drives a Prius too. He’s worth a staggering 62.3 billion. In 2020, that made him the 10th richest man in the world.

Michael Bloomberg doesn’t drive a flashy car either. Perhaps he understands the psychological premise of hedonic adaptation. When we buy something new, it often excites us at first. But before long, we adapt. An expensive, high-performing car becomes just another tool to move us from place to place. That might be why the multi-billionaire businessman drives a Chevrolet Suburban, despite having a net worth of $60.1 billion.

Steve Ballmer, the former CEO of Microsoft, might also surprise you with his choice of cars. Ballmer is worth a cool $70.4 billion. But he drives a Ford Fusion Hybrid. You could buy the same car, new, for about $25,000.

Then there’s Warren Buffett. He consistently ranks among the four richest people in the world. In 2014, he bought the most expensive car he has ever owned: a Cadillac XTS. You could buy the latest edition for about $45,000.

Even the world’s richest man, Jeff Bezos, has a modest choice of cars. He owns a private jet, which offers utility, as he flies around the world for business and pleasure. But he reportedly drives a Honda Accord. 

Some of these billionaires might have Bat Caves stuffed with fast, exotic cars. I’m really not sure. But the cars they drive daily don’t scream, “UR2ND.” Perhaps they would agree with my affluent friend who says, “Nothing good really comes from showing people what you own.”

Related Articles

This article contains the opinions of the author but not necessarily the opinions of AssetBuilder Inc. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational puposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.

Performance data shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

AssetBuilder Inc. is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and expenses carefully before investing.