Sign me up for the SoM newsletter! 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. The watch is in such high demand that there is a multi-year waitlist for it. Banks will borrow your cash and pay you an interest rate. And, their reactions were polar opposites of one another…, Related: Where to Put Your Money in a Recession – Here’s What We’re Doing. It is easier all around to make money when you are rich. In this world, labor isnât the only exchange for money. Most of them can go to zero, but I just need one home run to make it all back and then some. This time, be ready. The trend is on track to exacerbate dramatic wealth and income gaps in the U.S., where â¦ And it goes to show you that nearly anyone can become wealthy – not just those that have rich mommies and daddies. Required fields are marked *. It is a shame that financial literacy is not taught to high school kids (or even younger). Small Changes...They Can Transform Your Life! 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. In addition to misconceptions about rich people being selfish, the majority of people correlate wealth with the requirement of hard work. I made my money growing a small software company over 20 years. Think about the owner of a law firm, a dental practice or an accounting firm to see leveraging other peopleâs time in action. That is another reason why the rich get richer. At the same time, the added freedom from a higher paycheck has enabled me to take on more risks I’d otherwise not want to consider with a lower income. My cash sits in an interest bearing account paying me over 2%. They have two things working in their favor over the average person: (i) assets and (ii) strong income. There’s the story that the media will tell you…and then there’s my story based on experience and years of observation. The poor are getting poorer RELATIVE TO THE â¦ Likely, just like all the other news sources, wealth is considered the top 1% of net worth individuals. People will pay you to live or work in your real estate property. The rich have more income producing assets that will help generate cash flow and continue to add to their own net worth. I see, you have Reason #10 – The Rich Can Take On More Risk. Suddenly, $720k just sounds absurdly rich and a little bit out of scope to be honest. Therefore, the rich will elect to work on something that can produce a higher compensation. Like you, we’ve diversified our assets and they’ve respectively have grown over the years. It is mainly the rich who have access to invest in these markets, and thus, the rich get richer. Once you become rich, a lot more channels for income and wealth open up to keep getting you richer. 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. I started this blog back in 2019 to help people better their financial health as well. That makes the lenders feel more at ease. When the stock market began plunging in March, guess what the majority of America (the heavy spenders) did? If you have money, you can also buy such items. If you have a willingness to learn, I will continue to teach. Donât hate the rich for the ability to generate income and wealth. Broke people live their lives as if it will never change. These are the times when the rich get even richer â¦ There are good reasons why the rich are getting richer. And, they made bad choices because of it. Ringo found it ironic that when he was young, broke, and needed financial help, no one offered any help to him. Wouldn’t you say they have it pretty good? Those chores are necessary in order to maintain an organized life. Retirement Savings by Age - Are You on Track? 10% return on $10,000 is only $1,000. How is it that they continue to grow their wealth with all the economic challenges that continuously arise from year to year? Well yeah, that’s pretty rich – especially if you don’t live in a high-cost city like New York or San Francisco. Is It Time To Buy New York City Real Estate Properties? math). The rich can also hire many people to help with income producing businesses or projects. But, what more precisely does this mean? Stick around and youâll learn how to pay off your debt, buy houses for cash, and load up your retirement! The rich have money to buy rare, unique and expensive items. Your email address will not be published. Although, for the young ones out there, it can still be done. Take Kylie Jenner for example. But our research finds that wealthy people often earn a higher return even on more conservative investments. E: This is typically an employee working for a small or large business. But is this really a realistic definition for the rich? Why Do Rich People Get Richer? People also will pay to use certain assets. 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¦ The average also get richâ¦ IF they believe wealth is attainable. The law is put in place to protect the average person from getting exposure to what the government perceives as hard to understand and riskier products. However, they donât directly produce income. Robert Reich, American born, also had strong economic views in his book, Why the Rich are Getting Richer â¦ There are more financing options available to the rich because of this. Here’s the key: They prepare themselves for the next opportunity. As satisfying as this was, I still felt that something was missing. 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. (It’s hard to win a game if you don’t know the rules!). Additionally, a lender wants to see strong income in order to cover the interest payments. 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. How do you believe people get rich? Most of their financial growth comes through employmâ¦ The watch retails for around $30,000 in the US. The most crucial of those concepts is what Kiyosaki has termed the Cash Flow Quadrant. He didnât have money and needed to claw and scrape to save enough to buy the nice drum set in order to make music. The reason why is because your house serves as collateral on a mortgage. There is nothing corrupt or illegal about this. I have investments in the stock market. In fact, there are government regulations out there which only make certain investments available to the rich. Michael, this is the “saddest” part of all of this. How to Make a Million Dollars in 10 Years, How The Debt Snowball Really Works (Free Tool Included For YOUR Debt Snowball!). Now this results in the rich having more connections. Anyone Can Be Wealthy In America – Are You? 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. I see it in my own personal financial situation. 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. Their influence is great on either employees or customers. Their next thought was how to actually scrape together more money that they could invest. 7 Reasons To Buy And 7 Reasons To Stay Away. 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. Rich people don’t get rich by accident. The rich have the money to hire more people to help provide leverage on time. The rich have more information or access to information than the average person. That’s how millionaires are made. In return, the lenders need to recover their principal back and charge interest. I thought about something related while doing my taxes this year. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! We all work for money accordingly to what we believe is a fair exchange for our time. Or, in other words, those that have a net worth of $10.4M or more. 1. the economy came to an immediate stand-still. I personally experienced that myself on a smaller scale. Nowadays, with the economy reeling, the old adage that ârich get richerâ has never been more pronounced, data shows, as the most vulnerable among us have taken the brunt of the pandemic. 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. It’s true. 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.”. I would argue, however, that globalization has a very strong force to actually make the rich poorer. Those are called income producing assets and rich people have a lot of those. As I moved up the corporate ladder over the next two decades, my income and net worth both increased. In this book, the reader will find out why debt and taxes make the rich richer. People like greater opportunities and, hence, they want to connect with someone rich. 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¦ Kylie used her immense number of Twitter followers to help promote her cosmetic line. Hopefully, now you understand why this is the case with the reasons listed above. Investing/stocks and real estate are open to most anyone. Her level of influence on her followers allows her the ability to generate great wealth. According to The New York Times study, to be in the top 10% as a 45-54 year old, you need to have a net worth of $1.1 million or more (don’t match that age group? For one, governments have responded to the pandemic by handing out money to citizens â through programs like the Canada â¦ This could be one that is a self-created circle. After just a short while into the recession, I realized there were largely two groups of people that were reacting to the situation. Why The Rich Are Getting Richer And The Poor, Poorer 924 Words | 4 Pages. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. It's Robert Kiyosaki's position that, 'It is our educational system that causes the gap between the rich and everyone else.' Get Exclusive Tips And Updates To Turbocharge Your Income And Wealth: Money Magnet – Rich Keep On Getting Richer, few politicians out there who believe you should be tax heavily on your effort, rental income for me with the added benefit of zero income taxes, 7 Secrets From Two 401(k) Millionaires To Turbocharge Your 401(k), 10 Ways to Lower Your Monthly Mortgage Payments. It comes with years, often decades, of living far below your means and working hard to earn an above-average wage. 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. The Cash Flow Quadrantcontains the four main forms of vocation. Even if I lose 100% of my investments in those fliers, I can still take the hit and it wouldn’t impact my finances much. This is the majority…. If you ask the media, the common designation for “rich” is the top 1% of income earners. With heavy demand and short supply, the prices will surely go up. 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 rich can hire people to perform such chores. Wealth begets wealth, and the more resources you have the faster you can accrue more. But if you have $10 million in assets, $100,000 a year in compensation for working a job doesnât sound as great. Cash is another example of an income producing asset. Instead of exchanging only one personâs time for money, the rich can exchange many employeesâ time for money. This means in order to take advantage of a PE Fund investment, you need to be rich. And, you’ll likely be getting richer if you match the #1 main reason rich people get richer…as I outline below. Take a private equity fund (PE Fund) investment for example. He laid the foundation for many of his messages in the international best-seller Rich Dad Poor Dad - the #1 personal finance book of all time - and in Why the Rich Are Getting Richerâ¦ Hopefully, this seems logical to you and is one of the reasons why the rich continue to get richer. 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. In fact, I am a big fan of real estate and believe it should be a cornerstone of your investments. 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. The Opinion of the Media. The growing wealth of the rich, and the relative stagnation of the middle class, are due in large part to diverging incomes, but investments also play an increasingly important role. Capitalism itself, defined by the exploitation of labor by capital, is why one class keeps getting filthy richer while the vast majority suffer. They don’t know exactly what it will be or where it will come from, but they know it’s coming. So, I decided to focus my passion in the stock market. 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. The other common designation for the rich is to be in the top 10% of income earners. In fact, Iâm sure not only can he get free drums; he can get companies to pay him to use their drums. If you are rich, which of the reasons do you think helped you create more income and wealth? My name is Derek and I am a no-debt kind of guy! Do you know how they reacted to the recent downturn? 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. Before we dig into the theory that rich people get richer, I figured we first better take a step back and define what rich really means! Where to Put Your Money in a Recession – Here’s What We’re Doing. Explained perfectly from stating his views about the current â¦ The rich might also have better connections and relationships which can result in better education and information from other experts in a particular field. The earlier the start, the greater the compounding effect, especially in the back years. What’s the real reason for this? In addition to the billionaires, the rich are getting richer too. Kevin OâLeary said he waited 8 years himself to get his hands on that watch. People in general think the rich have better connections. They might have gotten rich because they excel in a particular field. People in general â¦ Your email address will not be published. To the audience: Can you think of any more reasons why the rich keep getting richer? They were fearful. That means that 88% of millionaires are self-made. Like you said, it’s a game that many don’t even know exists. Those items are coveted by other rich people. Richer â¦ 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. There are reasons why the rich have more information. But if you have $10 million, a 10% return produces $1 million. Banks might also provide better financing options if you have more assets with them. I remember reading that Kevin OâLeary of Shark Tank fame recently purchased a Patek Phillipe 5711 watch. Itâs why Iâm passionate to help correct this and the reason Iâve started my business. Raking the leaves, cleaning the house, doing the laundry, cooking, and running errands are some of the chores performed. The 1% don't think or act like the rest of us, and this is why they â¦ And, in order to capitalize on it, they need to have funds available and they need to constantly be on the lookout (ie. The information that the rich have can be more valuable and can result in greater wealth building opportunities. The author says the following about both books: If Rich Dad Poor Dad was elementary school, this book (Why the Rich Are Getting Richerâ¦ How Rich Are Americans On A Global Scale? $100,000 a year might sound good to someone with $25,000 in assets. 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. For examle, there has been much talk about outsourcing and that it is bad for America because American jobs get â¦ What about those that have a net worth of $1 million? If you are a rich guy, you donât need to read this â¦ The Rich Are Getting Richer During The Pandemic. 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). It’s a real shame basic investing (like a Vanguard index fund) is not taught to everyone while in school. Relationship pricing is given to the bankâs clients with assets deposited at the bank over certain thresholds set by the bank. The rich end up getting more money for hours worked because they believe a higher pay amount is necessary for their time. There is simply no reason why more people don’t have large amounts of savings — they just don’t know the “game” (ie. But…what is their definition of wealth? Marx's Why The Rich Are Getting Richer And The Poor, Poorer. Are you ready to start thinking like the rich? Upon buying the watch at $30,000, Kevin was able to make a quick 100% return on his purchase. My assets are hard at work in making me richer. My rental properties are generating good rental income for me with the added benefit of zero income taxes. When I first started out in my professional career as a corporate peon, I made very little money. Get Your Custom Essay on Why The Rich Are Getting Richer And The Poor Poorer Summary Just from $13,9/Page. 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