MrBeast, the YouTuber who leads an empire valued at $5 billion, confessed that his bank account is in the red and he borrows money. The reason is not poverty, but tax strategy: his fortune is in shares of his company, not liquid cash. For the average citizen, this reveals how millionaires avoid selling assets to avoid paying taxes, using loans with those shares as collateral.
How credit with shares as collateral works 💰
The practice is called a securities-backed loan. The millionaire deposits shares with a bank and receives cash, typically up to 50% of the value of the shares. The bank charges low interest because the risk is minimal. As long as the loan is not repaid by selling shares, there is no taxable event. It is a way to obtain liquidity without generating taxable capital gains. Legal, but criticized for creating a tax gap between salaried workers and large investors.
Poor MrBeast, with $5 billion but no money for coffee ☕
So next time you see MrBeast giving away cars or houses, remember he does it with borrowed money. It's like the friend who treats you to dinner but asks you to lend him money for dessert. Sure, he has an empire; you, a maxed-out credit card. The difference is that the bank says of course, here you go to him, while they ask you for your mother-in-law's guarantee. Ironies of modern capitalism.