I’ve worked with some rather wealthy people in some large transactions. In terms of “cash”, it is rare that they will be required to come up with very large sums of “cash” (actually available checking account deposits that can be wired or used to obtain a certified or bank check) without at least about a week’s notice.
Most of the time, wealthy people will have a moderately small balance in their checking accounts, and most of the money they need for prompt availability in other forms of investments or accounts.
Most wealthy will have a “CMA” type brokerage account, in which they will hold securities (stocks, bonds, funds and other investment vehicles) and “cash.” A feature of these accounts is that any “cash” balance in the account at the end of any day is swept into a money market fund that day, so it is invested productively. If there is a need for cash for an investment or withdrawal, there is a redemption from the money market fund for the amount needed. Thus, when an investor says part of his portfolio is in “cash”, it really means a money market fund.
In addition to “cash” in their brokerage accounts, there are readily marketable securities. Most stocks and bonds listed on major exchanges can be readily sold on any day the market is open, and most ordinary mutual funds provide that they may be redeemed on any trading day at net market value. All of these types of funds can pretty easily be liquidated to available cash within a few days.
The very wealthy will likely have some portion of their investments in less liquid investments. Often some of the securities they own will be “restricted securities” because of the conditions in which they obtained it (e.g. private offering) or their position in connection with the company (e.g. officer, director or other insider). Other investments are in private funds and other investment vehicles which do not allow for prompt sale or disposition of the investment. In addition, many of the wealthy have a portion of their otherwise marketable investments in trusts, pension plans, and other arrangements which do not allow for quick disposition.
You are correct that most of the wealthiest individuals have a small portion of their overall wealth in readily marketable investments. For instance, a large portion of Bill Gates’ fortune is tied up in Microsoft stock for which cannot be immediately sold both because of securities laws restrictions on how much stock he can sell as an insider and holder of unregistered securities and because if he were to dump a large portion of his stock onto the market, it would severly depress the stock price. I’m sure that Mr. Gates has a program of regularly selling relative small portions of his Microsoft stock to obtain cash for other investments, but none of us have any ability to determine how much of his fortune is in marketable investments and how much is illiquid.
We don’t even know how much the “richest” people in the world are actually worth. The Forbes 400 and other listings are just estimates based in part on public reporting of stock holdings of those whose fortunes are largely in public companies where these things must be disclosed, and otherwise wild and speculative guesses of the worth of the others. It is simply impossible to determine who has the largest amount of readily marketable assets.
