Editor’s note: This article was first published in October 2014. All figures are from that month, including Gates as the world’s second-richest man with $81 billion and his Microsoft holdings and dividend. Bill and Melinda Gates divorced in 2021, and the forecast that he would sell all his Microsoft shares by 2018 has expired.
In this article we answer three questions:
- How much does Bill Gates earn a day?
- Can you live off the stock market?
- How do you build an asset that generates the passive income everyone wants?
Despite being almost retired, Bill Gates is still the second-richest man in the world, with a fortune of $81 billion.
Gates is no longer Microsoft’s largest shareholder. At the moment the largest shareholder is his friend, successor and former CEO, Steve Ballmer. Even so, Bill Gates is still the second-largest shareholder with 298 million Microsoft shares, not counting the 425,000 shares held by his wife, Melinda Gates.
Bearing in mind that Bill Gates also invests in other companies that pay dividends, just from the dividends on his Microsoft shares ($1.24 per share a year, or $0.31 a quarter) Gates receives $368 million a year, which means his income is more than $1 million a day. Again, that is from his own company’s shares alone.
Although Bill Gates would only need to hold on to these shares to keep collecting that amount of money, he drew up a plan to sell 20 million shares every quarter, according to The Motley Fool. That is how Ballmer has overtaken him in the number of shares.
If Gates keeps up that pace, he will have sold all his Microsoft shares by 2018. Although he will no longer collect these dividends, I don’t think he will have trouble making ends meet.
Answering the question: “Can you live off the stock market?”
Clearly, you can live off stock market investing, but this is the way to do it. To receive, every quarter or every year, enough money to live off our investment, we clearly must first have earned a lot of money to build an investment portfolio big enough for the dividends we collect to reach us in large amounts and consistently.
(Read: The fascinating life and career of Bill Gates)
And that is real passive income.
Shares are one of the most profitable assets for seeking that longed-for passive income, but we come back to the same point: first we have to work very hard and earn a lot of money to build this asset.
If you spend decades of your life saving, investing in the stock market and reinvesting the dividends (always in very solid companies), over time shares become our salvation for a peaceful retirement free of financial worries. It is even an asset we can leave to our children and grandchildren. And its biggest advantage is that it is always a liquid asset.
Further reading
- 5 steps to building a dividend investment strategy
- The question that measures the health of your personal finances
- This is how rich you would be if you had invested €1,000 with Warren Buffett
Featured image: © European Union, 2023, CC BY 4.0, via Wikimedia Commons.
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