HOW TO GET RICH LIKE WARREN BUFFETT AND RICHARD BRANSON

Streets of Monaco Yacht.

1. Warren Buffett.

Economist John Kay calculates what would happen if Warren Buffett had a fund manager.

The fund manager would deduct charges from the profits on Buffett's investments. (who's paying for all those yachts?)

How much of Buffett’s $62bn would the fund manager end up with.

The answer is that the manager would get $57bn.

And Buffett would be left with only $5bn.

"This assumes an annual fund management charge of 2 per cent, and a performance fee of 20 per cent of gains – the norm in the hedge fund industry."

On 18 November 2011, The Financial Times asks who's paying for all those yachts?

If you give your savings to an investment manager, there will be hidden charges, fees and other deductions.

Abramovich yacht

The Financial Times reports that the boss of an investment management firm gave a presentation to UK government officials.

This boss provided a real-life example of what happened when a UK private investor put £70,000 into a pension fund, back in 1994.

Over the next 15 years, the stock market rose by 66 per cent.

This should have meant a gain of £46,000, making the pension fund worth £116,000.

But, in 2009, the investor was told his fund was worth just under £70,000.

His £46,000 had been eaten up by charges and fees.

FT Money has revealed that "personal pension funds on sale today can take 39 per cent of a final fund value in charges, over a 25-year period."

David Norman, the founder of TCF Investments, suggests that investing £100,000 in the average UK equity mutual fund over 20 years will generate a sum of £227,695, assuming 7 per cent growth.

But, £159,272 will be deducted in various charges. (who's paying for all those yachts?)



2. RICHARD BRANSON

Northern Rock is a bank that was taken over by the British government at a cost of £ 1.4 billion.

It is now to be sold to Richard Branson.

Branson's Virgin Group will spend only £50 million in cash to get hold of the bank.

(Northern Rock cash used to fund deal)

According to the Financial Times, the government will get £747 million.

But, a third of this will come from Northern Rock itself.

"Virgin Group is injecting only £50m of cash alongside a similar amount from little-known Abu Dhabi fund Stanhope Investments, and close to £260m from US financier Wilbur Ross..."

There is talk of asset stripping by Branson.

Wilbur Ross used to work for the Rothschilds.

(Financier who got Northern Rock rolling - FT.com)