1. When the rich get richer they get more powerful and that puts them in the position to lobby for policies that make them richer still,â Summers said. Required fields are marked *. The Cash Flow Quadrantcontains the four main forms of vocation. One of the greats is this: “Be fearful when others are greedy, and be greedy when others are fearful.”. If you’ve got an income of $120,000 a year and your net worth is in excess of $1 million, you’re rich my friend. The rich have assets, especially income producing assets. I’ve made a few $10k to $20k investments which are just fliers for me because I can take on that risk. They tend to compare compensation to their asset pool. The most crucial of those concepts is what Kiyosaki has termed the Cash Flow Quadrant. He says that all Americans are sailing in different boats with one sinking fast, another slowly, and the last one uprising gradually. I personally experienced that myself on a smaller scale. That is another reason why the rich get richer. MHM, yes financial education is sorely lacking among the majority of Americans. Those assets can serve as collateral on a loan. Rising start-ups with tremendous potential in Silicon Valley can easily attract capital. Divided into to 4 parts; why the rich are getting richer, a tale of two teachers, what is real financial education, and no fun economics. Hopefully, now you understand why this is the case with the reasons listed above. According to Forbes magazine, Kylieâs net worth hit $1 billion and that made her the worldâs youngest self-made billionaire. Your email address will not be published. If you ask the media, the common designation for “rich” is the top 1% of income earners. The rich have better connections and those connections offer better investment opportunities for them to keep getting richer. Last check, her Twitter followers totaled 27 million. It is up to parents to educate their kids on personal finance matters (or for the kids to figure out themselves which might result in very late starts or no start at all). People, â¦ The rich have higher cash flow than the average person. My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. The rich donât gamble on big financial decisions; they do what they can to â¦ Retirement Savings by Age - Are You on Track? That means that 88% of millionaires are self-made. But today, since the topic is about how or why the rich get richer and the poor people are getting poorer, let me share my point of views about it. According to U.S. News, based on a survey of millionaires (which, by the way, includes the ultra wealthy we noted above), only 12% of millionaires inherited their wealth. In early March of 2020, the stock market began to slip. Information can produce greater wealth and income. But now that he is rich, famous, and can easily afford any drum set in the world, he can get them for free any day of the week. And those reasons have nothing to do with being evil, being a bad person or performing illegal acts as the general population is led to believe. The median, according to Gallup.com is about $10,000. I think you captured all of the ones I could think of too! Because of this high demand, the price of the watch in the secondary market ballooned to around $60,000. Average Income In New York City: What Salary Puts You In The Top 50%, Top 10%, And Top 1%? ... in the world where you can start out with nothing or immigrate from another country and become highly successful and rich. If you can only offer capital to the start-up, you will lose out to another prospective investor who can bring both capital and relationships to the table. Robert argues that the boat sinking very fast carries with it, routine producers. Their next thought was how to actually scrape together more money that they could invest. But our research finds that wealthy people often earn a higher return even on more conservative investments. The 1% don't think or act like the rest of us, and this is why they â¦ When Ringo was a young lad and just started out in music, all he wanted was to own a nice drum set. We all work for money accordingly to what we believe is a fair exchange for our time. It must include your net worth as well. the economy came to an immediate stand-still. After just a short while into the recession, I realized there were largely two groups of people that were reacting to the situation. If you’re making a $120,000 salary each year, you’ve got a pretty rich income. Myles agrees, adding that governments â¦ Hereâs What You Need To Be Upper Middle Class And Upper Class In NYC & It’s A Lot, How One Person Built A Real Estate Empire With Little Money To Start. Right – the earlier you start the game and the longer you play, the easier it gets (and the more material the dollar amount). Your email address will not be published. This hopefully gives you added motivation to become rich. Why can banks lend at a better rate on a mortgage than on a personal loan? People like greater opportunities and, hence, they want to connect with someone rich. The rich can hire people to perform such chores. That’s how millionaires are made. They stayed frugal, did their best to earn more so that they could invest more, and once the market came back, they would be. 5 Simple Rules for Getting Richer. Well, if you listen to the media, youâll likely come up with answers like: they inherited it, they â¦ In addition to misconceptions about rich people being selfish, the majority of people correlate wealth with the requirement of hard work. Hopefully, this seems logical to you and is one of the reasons why the rich continue to get richer. I honestly don’t study Warren Buffett that often, but I love the simple, yet wise messages that I hear from him every so often. 10 Reasons Why Everyone Should Be Wealthy Today, 20+ Ways to Invest Outside of the Stock Market, 5 Reasons You Couldn’t Pay Me to Win the Lottery, 36 Side Hustles You Can Start Now to Earn More Money, 7 Reasons Why I Still Live in a Lower-Middle Class Neighborhood. It can be that the rich have more time to do research. Why is it that rich people get richer and everyone else seems to either go nowhere or actually go backwards financially? It’s not ultra-rich, ‘let’s head down to the wine cellar and pull out a bottle of 1811 Chateau D’yquem’ rich…but it’s still pretty freakin’ easy living. Where to Put Your Money in a Recession – Here’s What We’re Doing. The above scenario doesnât only apply to Ringo Starr; it also applies to many well to do people. The purpose of this article is to make you see that there are reasons why it is easier for the rich to gain more coins than the average person. But if you have $10 million, a 10% return produces $1 million. My name is Derek and I am a no-debt kind of guy! Take calculated risks. Capitalism itself, defined by the exploitation of labor by capital, is why one class keeps getting filthy richer while the vast majority suffer. Real estate is an example of an income producing asset. But is this really a realistic definition for the rich? The rich are getting richer, which is really not that hard to explain. Get Essay Robert Reich uses the examples of rising and falling of boats due to tides to explain the differences that exist between the rich â¦ They might have gotten rich because they excel in a particular field. And, they made bad choices because of it. This also allows the rich to borrow at a lower rate. So, yes, the rich get richerâ¦ IF they believe wealth is attainable. Banks will borrow your cash and pay you an interest rate. If you have a willingness to learn, I will continue to teach. The Rich Are Getting Richer During The Pandemic. On the other hand, there are those that don’t see the point in saving and investing. In addition to the billionaires, the rich are getting richer too. Ironically, itâs in times like these when everybody is overprotecting and trying to secure the little they have, that the rich come out to play. No one offered to help him out on the purchase. That makes the lenders feel more at ease. Rich people don’t get rich by accident. Even if their income isn’t that impressive, they’ve still managed to put themselves in an amazing position to retire with ease…and maybe even years before everyone else. In statistics, the phrase "the rich get richer" is often used as an informal description of the behavior of Chinese restaurant processes and other preferential attachment processes, where the probability of â¦ The trend is on track to exacerbate dramatic wealth and income gaps in the U.S., where â¦ The 9 Reasons Why Buying An Owner-Occupied Rental Property Is A Good First Step Into Rental Real Estate Investing. The rich have more information or access to information than the average person. Do you know how they reacted to the recent downturn? The below are some of the reasons why I believe I will continue to get richer. What’s the real reason for this? 10 Habits of the Rich You Need to Start…NOW! Broke people live their lives as if it will never change. I remember reading that Kevin OâLeary of Shark Tank fame recently purchased a Patek Phillipe 5711 watch. >>The only add on is that the rich have figured out the rules to the âgameâ when most people donât even realize thereâs a game being played. It felt a bit strange not being able to claim certain deductions or make Roth contributions as when I used to make a lot less. There are 10 reason why the rich keep getting richer and Patrick Bet-David covers them in this episode of Valuetainment. Cash is another example of an income producing asset. One of â¦ How do you believe people get rich? There are differences in opportunities available to me now after having accumulated some wealth than compared to two decades ago as a young professional in debt. Why The Rich Are Getting Richer And The Poor Poorer Article. Therefore, the rich will elect to work on something that can produce a higher compensation. How many of them inherited their wealth? I did not fully learn/understand stocks and real estate until my 40’s (because I was then looking for ways to diversify the money my company was finally putting out). If the job doesnât pay you what you believe you should make, you will probably decide to walk away and look for a new job. The information that the rich have can be more valuable and can result in greater wealth building opportunities. One way for the lenders to mitigate the risk of not recovering their money back is by asking for collateral on the loan. Oh, and a very low net worth…. Robert Reich, American born, also had strong economic views in his book, Why the Rich are Getting Richer â¦ People who do not want to wait years to buy that watch from an authorized dealer have driven up the price of that watch in the secondary market. They don’t know exactly what it will be or where it will come from, but they know it’s coming. This makes sense given the rich already have a sizable asset pool. Reason #2: The Rich Have Assets and Can Put The Assets To Work â I have assets I put to work. I started this blog back in 2019 to help people better their financial health as well. 10% return on $10,000 is only $1,000. Again, to me, this is just looking at those that are excessively wealthy. Although, for the young ones out there, it can still be done. If the economy is good, I assume you will take a job only if it pays you at least what you think is a good price on your time. There are more financing options available to the rich because of this. Those chores are necessary in order to maintain an organized life. Most of their financial growth comes through employmâ¦ Over the span of 20 years, I accumulated an 8-figure net worth. This kind of influence is also very valuable and can produce great wealth. Take Kylie Jenner for example. She launched her own successful cosmetic line which generated the bulk of her billion dollar net worth. However, they donât directly produce income. It is the steel Nautilus with a blue dial. The only add on is that the rich have figured out the rules to the “game” when most people don’t even realize there’s a game being played. The average also get richâ¦ IF they believe wealth is attainable. frequent local experiences (restaurants, clubs, memberships, etc.). But that is how the world works. Richer â¦ 7 Reasons To Buy And 7 Reasons To Stay Away. Some banks offer a quarter point or more in interest rate discount on mortgages if you hit certain asset levels with them. The rich might also have better connections and relationships which can result in better education and information from other experts in a particular field. When the stock market began plunging in March, guess what the majority of America (the heavy spenders) did? Just takes some persistence and focus. Relationship pricing is given to the bankâs clients with assets deposited at the bank over certain thresholds set by the bank. I see it in my own personal financial situation. You never know when that next opportunity is headed your way. For example, Bank of America recently offered me 0.50% off the normal interest rate on a mortgage if I deposit $1 million of assets with them. When I was first starting out in my corporate job with very little money to spend, no service provider offered to take me to a nice meal at a Michelin starred restaurant or box seat tickets to catch a basketball game in Madison Square Garden. Blood, sweat, and tears my friend. $100,000 a year might sound good to someone with $25,000 in assets. Hard to say â it really depends on your perspective. But, what more precisely does this mean? As I moved up the corporate ladder over the next two decades, my income and net worth both increased. Instead of exchanging only one personâs time for money, the rich can exchange many employeesâ time for money. Ringo found it ironic that when he was young, broke, and needed financial help, no one offered any help to him. As my corporate responsibilities increased, I was offered more and more free nice meals at restaurants and tickets to sporting events from various service providers in the name of relationship development. Some of the rich have gotten to their position because they lead companies or have a strong following. The rich have more income producing assets that will help generate cash flow and continue to add to their own net worth. (It’s hard to win a game if you don’t know the rules!). The rich feel the same way except they might place more value on their time. The purpose of this article is not to draw up hate or jealousy of the rich. He didnât have money and needed to claw and scrape to save enough to buy the nice drum set in order to make music. It’s time to stop with the payments, it’s time to build up your savings, and it’s time to invest for your future. They freaked out – their meager retirement investments were plummeting, So, they pulled money out of the market after the plunge, afraid of losing more, Then, they quickly started to try to save money (for fear or losing their job), but had so many payments that it was hard for them to do so, They didn’t withdraw any retirement funds, in fact, they reallocated their funds to invest into, They comfortably sat in their meagerly-sized, paid-for house and continued to enjoy a life void of payments. Now that I have more expendable cash, I get offered nice meals and tickets for free. To the audience: Can you think of any more reasons why the rich keep getting richer? Investing/stocks and real estate are open to most anyone. Itâs why Iâm passionate to help correct this and the reason Iâve started my business. PE Funds by law are only offered to accredited investors. Throughout Why the Rich are Getting Richer, Kiyosaki constantly refers back to his past proprietary concepts from past works so it helps to be familiar with those basic concepts. If you go to work, you expect to get paid for your time and effort. The watch retails for around $30,000 in the US. The infamous coronavirus was moving across the globe. I hope that seems reasonable to all of us, except for a few politicians out there who believe you should be tax heavily on your effort and collect very little for your labor. They weren’t ready. It’s a great question, and it’s one that I haven’t necessarily experienced or noticed until just recently. Their influence is great on either employees or customers. The Opinion of the Media. If you would have asked anyone to predict why the next economic downturn would occur, I’m not sure anyone would have pointed to a pandemic… It had really never happened before, and to overuse the term, it truly was unprecedented. I see, you have Reason #10 – The Rich Can Take On More Risk. The rich have better investment opportunities. Therefore, the definition of rich can’t just include your income. In fact, Iâm sure not only can he get free drums; he can get companies to pay him to use their drums. This is the majority…. People in general think the rich have better connections. You’ve probably heard me say it a million times…, “Someone can earn a million bucks a year, but if they spend a million or more each year, then they’re broke…just as broke as the guy begging for quarters on the street corner.”. They can afford to buy expensive items wanted by other rich people and those items can appreciate quickly given the amount of money the people who want the items can afford. Marx's Why The Rich Are Getting Richer And The Poor, Poorer. Well yeah, that’s pretty rich – especially if you don’t live in a high-cost city like New York or San Francisco. âWhy the rich are getting richer, and the poor, poorerâ by Robert Reich talks of the economic gap between the well-up people and the ones living below the poverty line and how it grows large daily. For one, governments have responded to the pandemic by handing out money to citizens â through programs like the Canada â¦ I mean…what’s the average yearly income around the globe (in other words, the average worldly income, not just the U.S.)? $5 million? Explained perfectly from stating his views about the current â¦ Hopefully, this blog can help you on your financial journey to greater wealth and financial independence. The watch is in such high demand that there is a multi-year waitlist for it. In general, let’s just make this a nice round number and say that your net worth needs to be $1 million to be considered rich. they just got lucky and were in the right place at the right time. Details of Why The RICH Get RICHER Original Title Why The RICH Get RICHER Edition Format Kindle Edition Number of Pages 10 pages Book Language English Ebook Format PDF, EPUB. Or, in other words, those that have a net worth of $10.4M or more. Her level of influence on her followers allows her the ability to generate great wealth. They place more value on their time. Get Your Custom Essay on Why The Rich Are Getting Richer And The Poor Poorer Summary Just from $13,9/Page. And it goes to show you that nearly anyone can become wealthy – not just those that have rich mommies and daddies. Suddenly, $720k just sounds absurdly rich and a little bit out of scope to be honest. How is it that they continue to grow their wealth with all the economic challenges that continuously arise from year to year? I would argue, however, that globalization has a very strong force to actually make the rich poorer. They were fearful. The other common designation for the rich is to be in the top 10% of income earners. The earlier the start, the greater the compounding effect, especially in the back years. Workers, organized and unorganized, are fighting to â¦ Anyone Can Be Wealthy In America – Are You? For examle, there has been much talk about outsourcing and that it is bad for America because American jobs get â¦ Take a private equity fund (PE Fund) investment for example. It is mainly the rich who have access to invest in these markets, and thus, the rich get richer. In this book, the reader will get an explanation of why savers are losers. The rich can instead use the time that would have gone into performing the chores to work on projects or perform tasks which can produce money or income. $2 million? Save my name, email, and website in this browser for the next time I comment. Now that’s real money! The poor are getting poorer RELATIVE TO THE â¦ Economy âA tale of 2 recessionsâ: As rich Americans get richer, the bottom half struggles. * This passage is part of the book "Why the rich get richer (and you still do not reach a fortnight)", by Francisco García Pimentel and Salvador Manzano, Panorama editorial, which is published â¦ With that many followers, she should be able to sell a lot of whatever product she wants to push to her followers. In fact, I am a big fan of real estate and believe it should be a cornerstone of your investments. I have investments in private placements and private equity funds. Press the â¦ Most of them can go to zero, but I just need one home run to make it all back and then some. Germany and had many views concerning labor in his book The Communist Manifesto. Upon buying the watch at $30,000, Kevin was able to make a quick 100% return on his purchase. Many people work hard to better their physical and mental health. Those investments have produced 10%+ IRR for me so far and have helped in increasing my net wealth. They have two things working in their favor over the average person: (i) assets and (ii) strong income. This time, be ready. Wealth begets wealth, and the more resources you have the faster you can accrue more. But…what is their definition of wealth? You can make a ton, but if you just spend it all and have nothing left, then you officially have nothing…which of course means a zero net worth. So how is it that rich people get richer? You know those people that have been living frugally all their lives (you know…those evil rich people that must have been handed their wealth…(eye roll)) and have been investing for decades? And, in order to capitalize on it, they need to have funds available and they need to constantly be on the lookout (ie. I'm ready to live a healthier financial life. And â¦ She is part of the Kardashian/Jenner family. In fact, there are government regulations out there which only make certain investments available to the rich. When all the click-bait articles are stripped down to their core, the reality is that wealth isn’t a fluke, it’s earned. Why The Rich Are Getting Richer And The Poor, Poorer 924 Words | 4 Pages. I remember reading an article about Ringo Starr, the famed drummer of The Beatles. That’s a pretty astounding stat. I have a passion for Finance, but I also have a passion for people. Additionally, a lender wants to see strong income in order to cover the interest payments. Well, if you listen to the media, you’ll likely come up with answers like: Sure, the top news sites can point to one particular article which states that 35%-45% of wealth is inherited rather than created. In this world, labor isnât the only exchange for money. It’s true. By spending little and investing large portions of yearly salaries, people eventually work their way into millionaires status. Why are the rich getting richer during the pandemic? You’re right, it’s much easier to make money when you’ve got money to leverage. It is a shame that financial literacy is not taught to high school kids (or even younger). Don't use plagiarized sources. Why do rich people earn high returns?