Opinion – Grain in Grain: Bezos’ yacht is less absurd than his car

Two months ago, news broke about the acquisition of a yacht worth USD 500 million by Amazon CEO Jeff Bezos. The vessel is 127 meters long and will be the largest in the world in its category. At first glance it seems like complete financial nonsense. That’s what my colleague Marcelo argued to me: how do you spend all that on a boat? I disagree with Marcel.

When I see this news, I immediately remember the case of singer Rihanna who sued her accountant for almost going bankrupt. In her defense, he replied, “Wasn’t it obvious to her that if you spend your money on stuff, you’re going to end up with stuff and no money?”

I do not criticize Bezos, but his critics.

He has already achieved his financial independence and this acquisition does not compromise the maintenance of this financial freedom.

Bezos’ fortune is nearly $180 billion. I don’t know what your monthly expenses are, but maybe 30% of this wealth ($54 billion) is more than enough to support you for the rest of your life.

So his spending 0.28% of his fortune on a yacht is less absurd than you spending on your car. I’ll do the math.

Let’s say you have R$ 10 million of financial assets. If your car cost more than R$28,000, you’ve already spent proportionately more than Bezos. But, do you have R$ 10 million?

Individuals who have more than R$ 1 million of financial assets, usually have cars with a value of more than R$ 100 thousand. That is, in addition to spending proportionately much more than Bezos, they are compromising their retirement and financial independence.

Before you criticize me, I don’t have a car. I already had one, but I understood that this expense compromised the assets for my retirement. I have a bike to commute to work. I ride 14 km a day. Before that, I used public transport to go to my office and to Insper where I taught.

Perhaps you live far away from work and a bicycle is not a viable alternative. But, it is important to evaluate ways to reduce the cost of the vehicle. I will talk about this in the future.

Another common example would be the impact of acquiring a simple cell phone. If you have BRL 200,000 in financial investments and you bought a BRL 1,000 cell phone, that purchase is more harmful to your retirement than Bezos’s yacht is to his.

What matters is not necessarily the size of the expense, but how much it represents of your financial wealth and, above all, whether it compromises your path to financial independence.

Michael Viriato is an investment advisor and founding partner of Investor’s House

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